Rates tumbled due to announcement from Federal Reserve that it was buying $600 million in mortgage-backed securities and debt to help the market. The sudden rate drop led to a 200 percent surge in mortgage refinancing applications.

The 30-year fixed-rate average was 5.47% with an average 0.7 point for the week ending Dec. 11, down from 5.53% a week ago. Last year the average was 6.11%.The 30-year average has not been lower since March 25, 2004, when it averaged 5.4%, Freddie Mac said.

For some rich equity refinances 4.875 percent interest rates are common. Treasury plans to slash mortgage rates on new loans as low as 4.5 percent to stimulate home sales.

How easy is it to refinance now?

You need at least 20% equity in your home, and with the most challenged market you may end up needing more than 20 percent. When it comes to credit scores, a credit score of 720 is needed to get lower interest rates.

You must fully document your income and assets as well as your debt to income ratio need to be smaller now in a range of 43 percent or lower.

Should you wait for government to push rates lower?

A of today there are many homeowners who can already take advantage or lower rates. The more you wait, the quicker your property value may go down, squeezing your equity.

When and if government announced a new mortgage program, there will be many restrictions that homeowners need to qualify for.

Mortgage rates would have to fail in order to kick start the housing market and that is what Treasury department is thinking of to help housing market.

Many homeowners are doing very smart thing when they refinance. From paying bills to actually putting saving into retirement plans, savings account or anything that can be safe over a long period of time.

What is driving rates lower?

There few factors that have pushed mortgage rates lower. Stock market and gloomy economy outlook has triggered government to do something and with many actions taken by government it moved yields of 10 year treasuries.

Will rates jump back up? Yes they will rise from its lows and sometimes sooner than we may all think. If you are thinking of refinancing, now it is a time to do it.

Will government plans help boost the housing market?

In most cases what everyone can see the impact may not be as big as you might think. Lower rates can help homeowners from adjustable mortgages to fixed mortgages, but borrowers who desperately need to refinance may not qualify.

Higher lending standards prevent many to either purchase a home or refinance a home to get the most attractive interest rates.

What should I do?

Best approach is to get free mortgage quote and compare interest rate and monthly mortgage payment to see where you can save. Many websites offers such deals so therefore you have nothing to loose. Once you receive your quote you can simply decide if you are willing to wait for government to do something about mortgage rates.