Mortgage waiting game may be over Flurry of applications follows rate spike

November 14, 1993|By Lorraine Mirabella | Lorraine Mirabella,Staff Writer

Homeowners who've been waiting to refinance -- betting on even lower interest rates -- are cutting their losses.

After mortgage rates spiked up in the week ending last Sunday -- above 7 percent for the first time in three months -- some banks and mortgage companies were hit by a surge of applications. Many homebuyers and homeowners looking to refinance no longer wanted to gamble whether rates had hit bottom.

"The general feeling in the public is they've seen rates slightly lower for a period of time, and rates are starting to edge up," said Mark Anderson, branch manager of Affinity National Mortgage in Fells Point. "With a growing awareness that we're seeing the bottom, you see fewer people of a mind where they want to play the market any more."

For the past few months, homeowners had been holding back, watching others secure rates as low as 6.87 percent on 30-year loans. But when the national average rate spiked above 7 percent a week ago, many in the Baltimore area took it as a sign to act.

Champion Mortgage Co. of Parsippany, N.J., which entered the Baltimore market this year, took in 350 applications Monday -- mostly for refinancings -- more than on any other day since early 1991, said James M. Goryeb, vice president.

"We're real busy right now. We've seen a tremendous increase in calls and activity as a result of the rates increasing a hair," Mr. Goryeb said. "That sends a signal, and people are hearing in the news how rates maybe trending upward. People tend to get nervous and tend to act."

When asked for advice on whether to wait and see if rates fall some more, Mr. Goryeb says his company looks at how much of a gamble a customer can afford to take. Someone carrying a high interest rate, who would save money even if rates rise, could afford to wait longer than someone with more debt, for instance.

After the spike in rates two weeks ago, national rates barely changed, but Baltimore rates fell back below 7 percent.

The average rate for 30-year fixed mortgages rose to 7.12 percent, up from 7.11 the week before, the Federal Home Loan Mortgage Corp. reported last week.

In the Baltimore area, the average rate dipped to 6.97 percent from 7.07 percent, according to HSH Associates of Butler, N.J.

But some lenders found homeowners less than panicky. David Chisholm, senior vice president of Annapolis Federal, said rates would have to jump higher for many more people to react.

"We're still getting a steady amount in, but we're at the same level we were," he said.

At Atlantic Residential Mortgage Corp., which reported a record number of refinance applications in August and September, applications since then dropped by about 20 percent. Keith W. Stackhouse, president of the Bank of Baltimore subsidiary, blamed the season and rising rates. The last two increases have failed to bring in a deluge of customers, he said. "It takes a while for people to react when they see the rates turning," he said.

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