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CNN Live At Daybreak
Low Interest Rates Win-Win Situation
Aired June 05, 2003 - 05:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: If you're planning on refinancing your mortgage, now is certainly the time. At least that's what the experts are saying. Interest rates have dropped to their lowest levels in nearly 50 years.
And as CNN's Kathleen Hays reports, it's a win-win situation for homeowners and the economy.
(BEGIN VIDEOTAPE)
KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Home sweet home, it's getting sweeter than ever. Record numbers of cash strapped homeowners are refinancing their mortgages to fatten their wallets and sometimes to just make ends meet. And economists say it's not only keeping families afloat, it's keeping the whole economy going.
DAVID BERSON, CHIEF ECONOMIST, FANNIE MAE: The housing and mortgage finance sectors have never seen better times. It clearly is helping keep the economy moving forward.
HAYS: That's because when people refinance their mortgages, they trade in a higher mortgage rate for a lower one, saving money on their monthly payments. This week, Fannie Mae, the mortgage lending giant, said it now expects nearly $4 trillion of mortgage financing this year, with refinancings accounting for nearly $2.6 trillion of the total. That's as big as the entire mortgage market was last year.
Record low mortgage rates that just keep getting lower, that's the draw.
DAVID WYSS, STANDARD & POOR'S: Well, actually, the average mortgage out there now is about $125,000. If you save a percentage point, that works out to just about exactly $100 a month.
HAYS: People who refinance and take cash out of their homes make up about 45 percent of the total.
BERSON: And they've got a pool of money then that they can use to spend or save or pay off old debt.
HAYS: Home improvement is what half of the so-called cash re-fis are used for. This helps builders, home improvement stores and sales of furniture and appliances. The rest is spent mostly to pay for their kids' college educations. At some point, economists say this sweet spot in the mortgage market may start to sour. If President Bush's tax cuts kick the economy into a higher gear, that could mean a turnaround in mortgage rates and a cooling off of the refinancing boom.
WYSS: I don't know how much longer it can go. My feeling is it's coming to an end, that this is sort of a last push of refinancings. But I was wrong last December and I could be wrong again.
HAYS (on camera): Bottom line, economists say, if you're thinking about refinancing, do it now. Don't get greedy because rates may not have that much further to fall and when they start rising, it's anybody's guess just how high they'll go.
Kathleen Hays, CNN Financial News, New York.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired June 5, 2003 - 05:14 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: If you're planning on refinancing your mortgage, now is certainly the time. At least that's what the experts are saying. Interest rates have dropped to their lowest levels in nearly 50 years.
And as CNN's Kathleen Hays reports, it's a win-win situation for homeowners and the economy.
(BEGIN VIDEOTAPE)
KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Home sweet home, it's getting sweeter than ever. Record numbers of cash strapped homeowners are refinancing their mortgages to fatten their wallets and sometimes to just make ends meet. And economists say it's not only keeping families afloat, it's keeping the whole economy going.
DAVID BERSON, CHIEF ECONOMIST, FANNIE MAE: The housing and mortgage finance sectors have never seen better times. It clearly is helping keep the economy moving forward.
HAYS: That's because when people refinance their mortgages, they trade in a higher mortgage rate for a lower one, saving money on their monthly payments. This week, Fannie Mae, the mortgage lending giant, said it now expects nearly $4 trillion of mortgage financing this year, with refinancings accounting for nearly $2.6 trillion of the total. That's as big as the entire mortgage market was last year.
Record low mortgage rates that just keep getting lower, that's the draw.
DAVID WYSS, STANDARD & POOR'S: Well, actually, the average mortgage out there now is about $125,000. If you save a percentage point, that works out to just about exactly $100 a month.
HAYS: People who refinance and take cash out of their homes make up about 45 percent of the total.
BERSON: And they've got a pool of money then that they can use to spend or save or pay off old debt.
HAYS: Home improvement is what half of the so-called cash re-fis are used for. This helps builders, home improvement stores and sales of furniture and appliances. The rest is spent mostly to pay for their kids' college educations. At some point, economists say this sweet spot in the mortgage market may start to sour. If President Bush's tax cuts kick the economy into a higher gear, that could mean a turnaround in mortgage rates and a cooling off of the refinancing boom.
WYSS: I don't know how much longer it can go. My feeling is it's coming to an end, that this is sort of a last push of refinancings. But I was wrong last December and I could be wrong again.
HAYS (on camera): Bottom line, economists say, if you're thinking about refinancing, do it now. Don't get greedy because rates may not have that much further to fall and when they start rising, it's anybody's guess just how high they'll go.
Kathleen Hays, CNN Financial News, New York.
(END VIDEOTAPE)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
