The Federal Reserve’s continued support of low to no interest rates is a contributor to mortgage rates that remain near historic lows. Bankrate.com lists Friday’s (September 3) national average mortgage rate at 4.34 per cent.

Friday of last week, the national average was right at 4.5 per cent. Some lenders have 30-year fixed rates that are sitting just above the 4 per cent level.

Despite the low cost of borrowing, home buying has taken a hit since the expiration of new and existing home buyer tax credits as of April 30. Recent data on both new and existing home sales has been weak to modest.

However, current homeowners have been taking advantage of the opportunity to refinance. Some banks now offer easy refinance loans for borrowers with good credit. This means that in some cases, the homeowner pays no costs and needs no appraisal to refinance.

A one per cent reduction in mortgage costs can have a big effect on monthly mortgage payments and lifetime interest for a borrower. Savings of $100 to $200 per month are common with a one per cent rate decrease. Homeowners with higher monthly payments to start have seen even bigger drops. Lifetime interest savings can be in the tens of thousands, or more.

Of course, the Central Bank is more concerned in spurning the real estate market to help stimulate the economy. However, investors and prospects remain reluctant to get under a mortgage even at such historically low rates.

With unemployment hovering just below 10 per cent, a good percentage of the population cannot even consider a purchase at this point, no matter how low rates become.

Down the road, the economy should experience some benefit from the reduction in monthly loan costs for Americans. Many are likely taking their monthly mortgage savings and applying it to purchases, as opposed to paying down other debt. Consumer spending accounts for roughly 70 per cent of the US economy.

Once a lost cause, the 15-year fixed loan looks much more intriguing with its 3.86 national average interest rate. Homeowners looking for the fast track to paying off their home might find monthly payments affordable with rates that low.