With a cut in federal funds rates by the Federal Reserve, comes the inevitable crush of hopeful homeowners looking to refinance. Problem is the two don’t necessarily go hand in hand. (A decrease in the federal funds rate, like last week’s cut, discounts the cost to banks of borrowing money. Mortgage rates, instead, tend to depend on inflation concerns.) Still, mortgage loan officers and brokers around the South Sound have been fielding a flurry of calls and e-mails from clients looking to cash in.

Bankrate reported an average 5.57 interest rate on a 30-year-fixed mortgage in its weekly survey released Jan. 23 – down from 6.32 percent a year ago.

The Fed is meeting again today and Wednesday, and so I chatted with mortgage folks this week to get their perspective on whether homeowners should or should not be refinancing. (Expect a decision from the Fed Wednesday on another expected cut in the federal funds rate.)

Diane Inman, who owns Serenity Mortgage in North Tacoma, said she expects the Federal Reserve will again cut the federal funds rate.

“Is that going to radically drop home interest rates? I doubt it,” she said.

The best refinance candidate is someone looking to get out of an adjustable-rate loan and into a fixed-rate mortgage, she said. One inquiry in the last week, Inman said, came from a homeowner with a fixed rate of 6.0 percent. Inman recommended against a refinance, because rates aren’t low enough to make up for new “adverse market” fees now being tacked on by Fannie Mae and Freddie Mac and other refinance costs.

Racardo McLaughlin, who owns McLaughlin Capital Group in South Tacoma, predicted that rates will continue to fall through the end of the year. Mortgages a half-percentage point or more above current rates tend to be the best candidates for a refinance, he said.

“People need to understand money is available if you have good, reasonable credit regardless of what’s being talked about in the subprime market,” he said.

The problems McLaughlin said he more often runs into are declining home values or equity tapped out in previous refinances. And, he said, loans are taking longer, because of recent lay offs at big mortgage companies. So, if you’re looking to lock a good rate, forget about a 15- or 30-day lock. Many lenders, he said, won't do anything under 45 days.

The Seattle-Tacoma area remained one of the few housing markets in the country to show year-over-year home price increases in November, according to the latest figures released today by the S&P Case-Shiller index. Of the 20 metro areas tracked, just three showed annual appreciation. The other two were Charlotte, N.C., and Portland.

Seattle-Tacoma’s increase of 1.8 percent from the previous November, however, paled compared to recent months. In fact, a look back at year-over-year appreciation shows a steady decline:

October: 3.3 percent
September: 4.7 percent
August: 5.7 percent
July: 6.9 percent

The index measures the gain or decline in prices of a typical house, not including condos, with the base set at prices in January 2000. When combined, the 20 areas around the country tracked by the index had price declines of 7.7 percent.

The rate of foreclosure-related filings in 2007 ranked Washington state No. 21 in the nation, according to the latest figures to be released today by real estate research firm RealtyTrac. The company measures default and auction notices and bank repossessions. Compared to 2006, Washington had 28 percent more such filings last year, RealtyTrac said.

The report says that last year .57 percent of Washington households entered some stage of foreclosure. Where's the highest percentage? Nevada, with 3.4 percent of households starting some part of the foreclosure process, according to RealtyTrac.