Mortgage Rates See Record Lows

As school lets out and summer approaches, the lifeguards at the local pools aren't the only ones who are swamped with visitors. Some of the busiest places in town are mortgage offices which are seeing a flurry of activity caused by historically low interest rates. 

According to Bankrate.com, a 30-year fixed loan is currently hovering between 4.70 to 4.80 percent. These rates are among the lowest recorded rates in the 25 years that Bankrate has been tracking mortgage rates.

The European debt crisis is fueling the low rates. Nervous investors are flocking to U.S. Treasury bonds which they deem a safe investment. In turn, treasury yields drop and interest rates dip as well.

The Mortgage Bankers Association reports that most customers are taking advantage of the low rates to refinance their current loans. 

There are two primary reasons to refinance a mortgage: to get a better interest rate or to secure cash from a home's equity. Correspondingly, the demand for loans to purchase a home is down after a busy spring due in part to the expiration of the federal home buyers tax credit on April 30.

However, home buyers have a great opportunity in today's housing market. "It's the best time in our generation to buy," says Mark Zandi, chief economist at Moody's. "Strike now," agrees Greg McBride, a Bankrate.com senior financial analyst. Experts predict that interest rates will climb as the recession lifts and the economy slowly improves.