This question gets asked every few months, and I will say the same thing I have been saying for years. If you would have asked me this question in 2002 or 2003, when rates really started to drop, I would have told you that the next year they would be back up to 8.5%. Every time I say that they can't drop any more, they do.
For those who quote 2.75%, that is on a 5 year ARM, so I wouldn't want people thinking that is the way to go, and it can be very dangerous for the wrong person.
I have someone right now who I am refinancing into a $900,000 10 year fixed (not a 10/1 ARM) for 3.5% with very low closing costs. He wanted to know why would a bank go that low? You can see the answer in Ron's response, the banks are paying 1.5%, or less, on deposit money. So, who's getting the good deal? And, they are getting all their money paid back in only 10 years.... more