By Jim Droz

Silver linings and seeing the glass as half full have been hard to envision with the recent grim economic news.

But plunging mortgage rates at least one sign of optimism for homeowners.

The average rate for 30-year fixed-rate mortgages fell to 4.54 percent for the week ended Aug. 3, according to consumer-information site — not far from the record low of 4.42 percent in November 2010. The average rate on 15-year fixed-rate mortgages dropped to 3.68 percent, a record low.

Homeowners should act fast, said Greg McBride, a senior financial analyst with After Sept. 30, the limits for conforming loans — those backed by government-sponsored agencies Fannie Mae or Freddie Mac — are scheduled to shrink to $625,000 from $729,750. Mortgages above $625,000 will likely face higher rates after Sept. 30 — up to a half a percentage point, McBride said.

“There is a tremendous sense of urgency to act now before the goal posts change,” he said.

Mortgage rates vary by region, even among the biggest lenders — but they are falling across the board. A recent survey showed that Bank of America Corp., the nation’s largest bank by assets, is offering a 4.4 percent rate on 30-year fixed-rate mortgages in New York City. J.P. Morgan Chase & Co. is offering California homeowners a 4.5 percent rate on 30-year fixed-rate mortgages, and 3.6 percent for 15-year fixed-rate loans. Rival Wells Fargo & Co. is pitching a 4.5 percent rate on its 30-year fixed-rate mortgage for Chicago homeowners, and 3.4 percent on 15-year fixed-rate loans.

The downside, of course, is that the latest decline in rates is a result of disappointing economic reports, but falling mortgage rates can lead to big savings. A homeowner with a $700,000 30-year fixed-rate loan at 5.5 percent pays $3,974 a month. By refinancing to a 30-year fixed rate at 4.5 percent, the payment drops by $428 a month — a savings of roughly $154,080 over 30 years.

Adjustable-rate mortgages, which carry lower initial rates that adjust to prevailing market rates in the future, also are near record lows. Rates for seven-year adjustable-rate mortgages are 3.5 percent, according to, while five-year adjustable mortgages are at 3.2 percent.

Keep in mind that the difference between rates on fixed-rate loans and adjustable-rate loans is widening — it now stands at about 1.3 percentage points, much higher than the average of 0.44 point, McBride said. That gap makes ARMs look more attractive.

Of course, ARMs come with the risk that payments will spike in the future. But assuming the fees are low enough, an ARM can make sense for homeowners who expect to sell in a few years and want to sock away some extra money, McBride said.

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