Some longtime homeowners like to muse about the good old days of the 1950s and 1960s, when mortgage interest rates were 5 percent or 6 percent, nearly everybody got the standard long-term, fixed-rate loan and the homeowning was easy.
Since that period, adjustable-rate mortgages have emerged as an alternative to fixed-rate loans and -- in the long period of inflation and high interest rates in the '70s and early '80s -- usually the only choice.
But there has been a steady drop in mortgage interest rates over the last six years.
It has not quite brought back the good old days, but it has helped forge a comeback for the plain vanilla fixed-rate, long-term loan.
Mortgage interest rates have stayed below 10 percent for close to a year now, and the national average for a 30-year fixed rate in mid-December was 9.66 percent, down from 9.8 percent a year ago and 10.7 the year before that.
The market may be responding. Sales of existing homes jumped 3 percent in November, to 3.14 million units, after two months of declining sales rates in September and October, the National Association of Realtors announced.
The group attributed the rise in sales rate to lower mortgage interest rates and declining consumer worries about the gulf crisis.
Mortgage economists usually discount prevailing interest rates by the rate of inflation, which represents dollars that will not, in a sense, be paid back. They call the resulting number the "real" interest rate, and here, too, the news is positive.
For example, the average fixed 30-year mortgage rate in 1984 was 13.76 percent and inflation was 3.9 percent, so the "real" mortgage rate was 9.86 percent.
For someone taking out a fixed-rate mortgage today at 9.7 percent, the 11-month inflation rate of 6.4 percent produces a real interest cost of 3.3 percent, representing a huge drop in actual cost to consumers since 1984.
For most borrowers, the lower rates seem to argue in favor of fixed-rate, as opposed to adjustable-rate, mortgages.
Adjustable-rate mortgages are essentially bets -- gambling images crop up regularly in experts' discussions of mortgage choices -- that interest rates are going to go down, and many buyers evidently do not believe rates can drop much more.
So there has been a steady slide in the proportion of new mortgages that are adjustable, from more than 40 percent two years ago to 23 percent today.
At the same time, adjustable rates themselves may be headed downward. The Federal Reserve Board recently cut its discount rate (the cost of funds to big banks that borrow from the Federal Reserve banks) for the first time in four years.
Also, several large banks have cut their prime rates, which are charged to their largest and best customers.
Since adjustable-rate mortgages are pegged to one or another of the indexes of borrowing costs, the general decline could result in lower rates for adjustable mortgages.
Many banks are responding to the lower fixed rates with sales campaigns to have their borrowers who hold adjustable-rate mortgages refinance with fixed-rate mortgages.
A logical step, it may seem, but banks typically charge 2 percent to 4 percent of the loan principal as their fees for such refinancing. Those fees must be a borrower's main concern in the decision to refinance, said Paul Havemann, vice president of HSH Associations, a New Jersey mortgage consulting firm.
"Anyone with an adjustable mortgage right now is on the wire," he said, "because they could either refinance and take advantage of these low fixed rates or hang on to see what their ARM will do for them in the next few months."
Because the country has had more than a year of single-digit rates, Mr. Havemann noted, people with ARMs have begun to see their rates drop for the first time in the last three years, when the number of ARMs skyrocketed.
The latest index on most one-year adjustable mortgages is 7.24 percent, down from 7.73 two years ago.
Someone who expects to remain in place and keep the mortgage for a long time should perhaps not take the risk of a long-term rise in rates just to get a year of lower payments, Mr. Havemann said.
But someone who expects to keep his present mortgage for a short time might do better to stick with the ARM and give its principal attraction -- its ability to follow rates downward -- a chance to pay off.
Not having the several thousand dollars to refinance a mortgage is another argument for doing nothing.
This has not always been a problem, because until three or four years ago lenders often let borrowers roll their loan origination fees into the loan.
But in recent years the secondary mortgage market, which buys most home loans and recycles them as securities, has made it harder to borrow the fees.