Area mortgage rates fall below 8%, lowest in more than 17 years A Fed move to cut discount rate helped trigger latest decline

July 09, 1992|By Ellen James Martin | Ellen James Martin,Staff Writer

Listings for Annapolis Federal, Bank of Annapolis and Mercantile in a table that accompanied an article yesterday about mortgage rates were for 15-year loans, not 30-year loans as the table indicated.

The Sun regrets the errors.

Baltimore-area mortgage rates have fallen below 8 percent on fixed-rate, 30-year loans and, in many cases, are below even the 17-year low reached in early January, local lenders said yesterday.

In the Baltimore market, mortgage rates have been falling for several weeks, taking a sizable drop in the wake the Federal Reserve's cut in the discount rate Thursday to 3 percent to 3.5 percent.

FOR THE RECORD - CORRECTION

"Rates have come down to try to spur on economic activity," said Theodore "Chip" Reichhart, executive vice president of Maryland National Mortgage, the mortgage arm of Maryland National Bank.

Yesterday, Maryland National was offering a fixed-rate, 30-year mortgage with two points at 7.875 percent. The same loan, with two points, had an 8.125 percent interest rate Jan. 9, Mr. Reichhart said. Points are fees paid to the mortgage company. Each point equals 1 percent of the mortgage amount.

The drop in mortgage rates is rekindling interest in refinancing, especially among those who missed the low rates in January.

"The phones are starting to get as busy as they were in January, and my schedule is almost as booked. I'm booked solid until next Wednesday," said Harvey Gruntman, who handles refinancing at Sequoia Mortgage in Pikesville, a subsidiary of Sequoia Federal Savings & Loan.

Yesterday, Sequoia was offering a 30-year, fixed rate loan with two points for 7.875 percent, slightly lower than its best rate in January, Mr. Gruntman said.

Generally, mortgage rates in the Baltimore area are one-quarter to one-eighth of a percentage point below the levels of early January, said Eugene Lugat, vice president of PaineWebber Mortgage, an East Coast lender based in Columbia.

Still, Mr. Lugat said, he does not expect lenders' offices to be as crowded as they were early this year, when many lenders were so busy they closed their mortgage-refinance windows.

"We expect to see a surge, but we don't expect to see the same volume that we did in January," he said, noting that much of the pent-up demand for low-mortgage-rate loans was satisfied during the first quarter.

"We've already seen a small increase in refinancings in the last couple of months," said Mark O'Brinsky, senior economist for the Federal National Mortgage Association, known as Fannie Mae, the nation's largest investor in home mortgages.

People who had planned to refinance their mortgages in January but didn't do so before rates rose could be rewarded for their procrastination if they refinance this month, said Keith Gumbinger, of HSH Associates, a New Jersey firm that tracks mortgage rates nationwide.

"This is one of those rare opportunities in life where the boat left and came back again," he said.

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