For people thinking about refinancing their home, or trying to squeeze their way into a house, the nation's slow-motion recovery from recession has provided a wide-open window of opportunity.
Mortgage rates are at their lowest level in four or more years, and lenders' shelves are stocked with an array of "products" in case a 30-year, fixed-rate mortgage isn't cheap enough to do the trick.
"For the country as a whole, typical rates are 9 percent fixed and ought to stay that way for the rest of the year and into 1992," said John Tuccillo, chief economist for the National Association of Realtors.
"What's happened," Mr. Tuccillo said, "is there really has been a break in the bond market. It happened a couple of weeks ago, and it's working its way through now."
Unlike in the first half of the 1980s, when mortgage rates fluctuated wildly from 12 percent to 18.69 percent in the region, rates since 1988 have moved within a 2 percentage point range, said Mr. Tuccillo. This summer's drop of about half a percentage point "is significant in that particular atmosphere," he said.
Throughout the region, mortgage rates have been drifting gently downward since early 1989, when 10.72 percent with 3 points was the average, according to Peeke LoanFax Inc., a Gaithersburg mortgage consulting firm that canvasses the region's lenders. Peeke's latest average for July was 9.32 percent.
While no August average is available, Maryland National Mortgage Corp., the largest lender based in the state, is quoting 30-year, fixed-rate mortgages at 8.75 percent with 3.5 points, or 9.25 percent with 1.5 points. Points are fees paid to the lender. Each point is 1 percent of the amount of the loan, so 3.5 points on a $100,000 mortgage is $3,500.
SG Typically, a lender will offer a lower rate and make up for it with
higher fees, but the same lender also will offer a low- or no-points loan with a rate that is a bit higher.
The Sun's latest survey of mortgage rates, published Sunday, showed a wide range of rates. At the low end of the scale, Elkridge National Bank was offering 30-year, fixed-rate loans at 8.875 percent with 2 points, while Farmers & Mechanics Bank of Frederick wanted 10 percent plus two points. More typically, Loyola Federal was asking 9 percent plus 2 1/4 points.
For buyers who can handle stiffer payments, a 15-year mortgage pays off the house in half the time. Bank of Annapolis was offering 15-year mortgages at 8.5 percent plus 3.5 points last week, while Chase Bank of Maryland was promoting a 15-year loan at 8.875 with 3 points.
"It's probably one of the best markets for consumers since 1979," said Chip Reichhart, executive vice president of Maryland National's mortgage unit.
Like most lenders, Maryland National offers a variety of mortgage plans in addition to the traditional fixed-rate loan. Adjustable-rate mortgages, on which the rate can go up as much as 2 percentage points a year to a maximum of 12 percent, are currently being sold as low as 6 percent with 2 3/4 points, Mr. Reichhart said.
In between the two extremes of the 30-year fixed and the adjustable are balloon mortgages, in which the loan becomes due after five or seven years. At that time the borrower is given a menu of options for refinancing.
Besides the drop in rates, there is additional good news: Most lenders have plenty of money.
"You won't hear any lenders saying they don't have any money today, unless it's some small savings association," said Victor Peeke, president of Peeke LoanFax.