Maryland homeowners are increasingly opting out of the mortgage refinancing market because of higher interest rates, but home purchasers are taking their places at lenders' offices.
"We're inundated with new applications -- mostly for purchases," said Kent Baklor, president of Bankers First Mortgage. A month ago, 95 percent of the applicants coming into Mr. Baklor's Owings Mills office wanted to refinance. Today, that figure has fallen to 50 percent.
"People are feeling a little more comfortable about getting out there and buying another house," Mr. Baklor said.
Local lenders, who were so swamped with refinancing applications that some closed their windows a few weeks ago, are delighted with the trend.
"I'm very thankful to have [applications for mortgages to buy homes] in front of me. Buyers are under a contractual obligation to go through with a purchase, and they're a lot less fickle customers than the refinancers, who will bail out if rates go up," said Michael E. Callahan, president of Genesis Mortgage Co., an Owings Mills-based mortgage banking firm.
The mortgage picture locally is mirrored nationwide, said Richard Peach, deputy chief economist at the Mortgage Bankers Association in Washington. "Applications to purchase a home are rising, but the increase in mortgage rates over the last month has caused the refinance numbers to start to slide," Mr. Peach said.
The decline in demand for refinancing relates directly to a recent rise in mortgage rates, said Paul Havemann, a vice president at HSH Associates, a New Jersey firm that publishes mortgage rate-information nationwide.
Nationwide, the cost of a fixed-rate, 30-year mortgage carrying 2 1/2 points (a point is 1 percent of the mortgage amount) fell to a 17-year low of 8.31 percent Jan. 10 but has risen to 8.80 percent, he said.
"Some people who wanted to refinance missed the boat," Mr. Havemann said. Many whose current mortgages carry rates of 9 1/2 percent or slightly higher now think applying for a new loan isn't worthwhile because of the time and refinancing costs required.