Thursday, June 19, 2003

Mortgage lenders swamped

Latest dip in rates spurs new wave of refinancing

Bloomberg News
and The Cincinnati Enquirer

Applications for mortgages rose last week to the second highest ever as mortgage rates slid to another record low, boosting home refinancing and purchases, the Mortgage Bankers Association of America said. The average 30-year fixed rate fell below 5 percent.

Tristate rates also have hit historic lows.

The average 30-year rate with no points (an upfront fee) was 5.21 percent this week, according to a survey of about 20 lenders by the Cincinnati Area Board of Realtors. That was down from 5.31 percent last week and 6.76 in 2002.

The latest rate is the 12th time local mortgage rates have hit a record low. The rate also is the lowest since the Realtors began tracking them in 1985.

Bill Bollin, president and chief executive at Winton Savings & Loan, one of the Tristate's largest mortgage lenders, said he's never seen mortgage activity this brisk in his 34 years in the business.

"We're so busy that it's impossible to get all the work done," he said.

The Washington-based Mortgage Bankers Association's index of mortgage applications increased 1 percent to 1701.7 last week. The record was reached in the final week of May when the index climbed to 1856.7. The group's refinancing index rose 1.3 percent to 9162.7, the third highest ever.

The average rate on a 30-year fixed mortgage declined to 4.99 percent, the sixth consecutive week the rate has reached a record low. Cheaper financing and rising home values have allowed owners to get extra cash during refinancing, which has helped bolster spending. That may give the economy an extra push forward in the second half of the year.

"The impact of the massive refi wave that is under way should be strongly felt in the third and fourth quarters of the year," said John Ryding, chief market economist at Bear Stearns & Co. in New York.

The current rate on a 30-year fixed-rate mortgage puts the average payment on a $100,000 loan, including principal and interest, at $536.21. That's about $100 a month less than the $634.04 mortgage payment of a year ago, when the rate was 6.53 percent. Three years ago, homeowners with an 8.5 percent mortgage were paying $768.91 a month.

"In terms of the interest rate environment, this is something we haven't seen in our lifetimes and may not see again," said Robert Toll, chief executive of Huntington Valley, Pa.-based Toll Brothers Inc., the largest U.S. builder of luxury homes.

Staff writer Jeff McKinney contributed

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