Low mortgage rates inciting a stampede Lenders besieged by consumers

September 05, 1993|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

Back before mortgage interest rates fell to a 25-year low, Ed Dinardo got maybe 15 or 20 phone queries a day. These days, Columbia Bank's mortgage director gets more than 100.

With average rates breaking the 7 percent barrier for the second week in a row, homeowners and buyers have flooded lenders' offices with questions about loans and refinancing.

"We just don't have enough people to return all these phone calls," said Mr. Dinardo, whose bank last week offered 30-year fixed-rate loans at 6.87 percent, with no points.

"Sometimes, it's taking two to three days to get a call back. People say a lot of lenders haven't called them back."

"If you were to ask me six months ago, I would say there's no way they'd be at this rate," he said.

"But the feeling is they can't go much lower, and that's causing the rush."

Calls from comparison shoppers also poured in at Citizens Bank in Laurel.

"With the amount of publicity that has surrounded the interest-rate change, and the fact that it is at these levels, now all of a sudden people are starting to wake up," said Dave Klingler, manager of the residential-loan unit.

"Those who have not caught the wave are getting in before things change. People with 8.5 rates are starting to feel like it can make a difference after all. Some refinanced a year ago and are coming back to get a better rate."

Last week, rates continued to fall. In the Baltimore area, average rates for 30-year fixed-rate mortgages dipped to 6.89 percent, with 1.45 points, down from 6.92 percent, with 1.5 points, the week before.

"The odds are rates will continue a slow, erratic downward trend," said Barry Havemann, president of HSH Associates, a New Jersey firm that tracks mortgage rates. "How much longer will depend on the economy. My personal belief is that they'll hit 6.75 before anything significant happens."

The Federal Home Loan Mortgage Corp., or Freddie Mac, reported Thursday that the average national fixed rate for 30-year mortgages fell to 6.93 percent, from 6.97 percent the week before.

At Atlantic Residential Mortgage Corp., a Bank of Baltimore subsidiary, loan applications jumped 40 percent in August, with about 60 percent of those requests to refinance, said Keith W. Stackhouse, president. Mr. Stackhouse said he suspects that publicity surrounding the low rates, as much as the rates themselves, is responsible for the increase.

"People are more aware than they've ever been of where interest rates are and what that can do for them," he said. "People can qualify for properties they couldn't have qualified for before."

The number of refinancings at Columbia Bank -- 19 out of 32 loan applications -- rose about 25 percent in August, Mr. Dinardo said.

Some of the customers have gone through the process up to three times in less than three years, as rates of 12 percent or 13 percent have declined to 9 percent, then to around 8 percent.

Now, some are considering a fourth go-around.

"In monthly payments, there's not much difference between 7 and 6 7/8 , but when that psychological barrier is broken, it gets a lot of people off the fence," Mr. Dinardo said. "People are very anxious now to get the ball rolling."

As recently as December, 30-year rates in the Baltimore area averaged about 8.5 percent. In nine months, rates have fallen 1.5 percentage points.

Andrew J.A. Chriss, president of the Greater Baltimore Board of Realtors, agreed that even the perception of saving money has spurred homeowners' and buyers' interest.

"You feel better if you're paying $4.95 than if you're paying $5.05,"

Mr. Chriss said. "Psychologically, it seems like a big difference. It spurs people to think now's a good time to do it."

He said the continuing drop in rates bodes well for the housing market, in which sales have increased modestly each month since late spring compared with the same period last year.

"To see any increase is significant in the economy we're in," he said. "We should continue to see the housing market strengthening. If interest rates stay in the 7 percent range, purchasing a home is that much more attractive."

RATES ELSEWHERE

As of Sept. 2, 1993 *

Current .. .. Prev. .. .. .. .. wk

City .. .. Rate .. Pts. .. .. Rate .. .. Pts.

Atlanta .. ..6 3/4 .. ..2 .. .. .. 6 3/4 .. .. 2

Boston .. .. 7 .. .. 1 3/4 .. .. .. 7 .. .. 1 3/8

Chicago .. ..7 1/8 .. ..1 7/8 .. .. .. 7 3/8 .. .. 2 1/4

Dallas .. .. 7 .. .. 1 5/8 .. .. .. 7 .. .. 1 5/8

Denver .. .. 6 7/8 .. .. 1 .. .. .. 6 7/8 .. .. 1

Houston .. ..6 7/8 .. .. 5/8 .. .. .. 6 7/8 .. .. 5/8

L.A. .. .. ..6 7/8 .. .. 1 3/8 .. .. ..6 7/8 .. 1 1/2

Mnpls. .. .. 6 7/8 .. .. 1 3/4 .. .. ..6 7/8 .. .. 3/4

N.Y. .. .. .. 7 1/8 .. ..1 3/4 .. .. ..7 1/4 .. .. 1 3/4

Phila... .. ..6 5/8 .. ..2 3/8 .. .. ..6 3/4 .. .. 2 Phoenix .. .. 7 1/4 .. .. 5/8 .. .. ..7 .. .. . 1/2

Seattle .. .. 6 7/8 .. ..1 3/4 .. .. ..6 7/8 .. .. 1 7/8

Tampa .. .. ..6 7/8 .. ..1 3/4 .. .. ..6 7/8 .. .. 1 D.C. .. .. .. 6 5/8 .. ..1 7/8 .. .. ..6.65 .. .2 1/4

* Average mortgage rates for single-family homes, as compiled by the Chicago Title Insurance Co. The rates are for 30-year, fixed-rate mortgages for 80 percent of the value of the house. A point is a one-time fee equaling 1 percent of the mortgage.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.