Low Mortgage Rates Point to Perfectly Sunny Summer

Europe just delivered the U.S. housing market a pleasant surprise for summer. Thanks to the financial chaos across the pond, experts are forecasting that mortgage rates may fall to 4.5 percent over the next few months, rather than shoot up to 6 percent, as previously predicted.

This could provide the historic opportunity many buyers have been waiting for.

The lower rates are good news for home sellers, as well. When the Obama administration's tax credit expired at the end of April, some real estate brokers were convincing sellers to reduce asking prices by $8,000 -- the same amount first-time buyers might have gotten through tax credits in the preceding months. With reduced rates, the cost of a home goes down, and sellers might be able to sell closer to their original asking price.

It's also a reversal of fortune for the more than half of all borrowers with 30-year fixed-rate mortgages of 5.75 percent or higher, who might be able to refinance their rates at more than a full percentage point. Furthermore, more people will qualify for mortgages, and others might find they qualify for a slightly larger loan.

"The lower the rate, the more affordable the mortgage payment; it's a great buying opportunity," Melissa Cohn, president of mortgage broker Manhattan Mortgage Co., in New York City, told HousingWatch.

Speaking from her office Monday afternoon, Cohn added, "We are definitely busy. People want to take advantage of this opportunity. I've been in business for 25 years; in terms of fixed rates, this is the lowest I have seen."