The cost of home-loan money is headed to the lowest level in 40 years in early 2008, as the Federal Reserve Board continues to cut the federal-funds rate to stimulate the economy. With the federal-funds rate down to 3 percent, experts say the Fed likely may reduce it to 2 percent or 2.5 percent before summer.

Benchmark 30-year mortgages now are in the mid-5-percent range. With the recent declines, home-loan rates are less than half of 1 percentage point above the historical rock-bottom of the market—5.21 percent in June of 2003, experts say.

To appreciate today’s historically low rates, housing experts say home buyers need only to look at what banks and mortgage lenders where charging in the early 1980s.

According to Freddie Mac, benchmark 30-year mortgage rates peaked at a whopping 18.45 percent in October of 1981 during the last great housing recession. Rates fell below 10 percent in April of 1986, then bounced in the 9-percent to 10-percent range during the balance of the 1980s.

Through a series of dips and up-ticks, average rates have fluctuated between 5.21 percent to 8.4 percent over the past 13 years.

—Don DeBat