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Due to the European debt crisis, mortgage rates are at historic lows!!

The current average rate for a 30-year fixed loan is 4.87% according to Bankrate.com.  That's the lowest rate for the 25 years since Bankrate started keeping track.

Even jumbo loan rates (loans for more than $417,000) have fallen.  The 30-year fixed jumbo loan is at an average rate of 4.5% which is down from nearly 6% at this same time last year.

"It's the best time in our generation to buy . . It may be the best time in any generation.  Mortgage rates are so low and with homes prices down and lots of inventory, you couldn't pick a better time to buy or re-finance." -Mark Zandi, Chief Economist, Moody's.

Europe's debt crisis is behind the drop.  Nervous investors are flocking to the security of US Treasury Bills, which pushes down their yield and influences a host of consumer interest rates, including those on mortgages.

The decline is also good news for homeowners looking to refinance, particularly those who owe more on their mortgage than their house is worth. 

"There's a tremendous window on re-financing . . . That's particularly true for people who can take advantage of the government's Home Affordability Refinaance Program (HARP) which allows home owners to refinance into low mortgage interest rates even if their property value has gone down.  Think of the benefits if you buy or refinance now.  Locking in now at the lower rates means more bang for the buck and more breathing room for homeowners when it comes to payments." -Greg McBride, Chief Economist, Bankrate.com

But the decline in rates probably won't last long, analysts say.  So homeowners need to act quickly.

HARP, which was due to expire at the end of June has now been extended through June 30, 2011.

"I think they won't last much longer than a month or two at the best.  I can see them going up to 5.5% by the end of June if not sooner." - Lawrence Yun, Chief Economist, National Association of Realtors

The reasons?  Yun says the worries over Europe will be fading soon and investors will be looking at other assets besides US Treasury Bills.  The U.S. Deficit will also push up Treasury Yields which will also have a major impact on Mortgage Rates.

Source:  CNBC