VA to Cut Mortgage Rate to 7.5%

The Department of Veterans Affairs said it is cutting its home loan interest rate today to 7.5%, the lowest level since 1973.

The mortgage rate will drop a half-point from 8%, the lowest since July, 1973, when it was raised from 6.0% to 7.75%.

The cut is the second in less than two months.

“The drop in the rate will mean more veterans will qualify for home loans, which will have the practical effect of stimulating the economy and boosting the housing industry,” VA Secretary Edward Derwinski said.

The VA said it will also make half a percentage point cuts in other rates--graduated payment mortgages, to 7.75%; home improvement loans, to 9.0%, and manufactured home loans, to 10%.

The VA said the rate cut is “good news” for veterans interested in refinancing existing mortgage loans.

It said that more than 33,000 veterans have taken advantage of lower rates to refinance their VA-guaranteed loans recently.