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Customers taking advantage of historic low interest rates
By Rick Armon
Beacon Journal staff writer
Published on Saturday, Dec 06, 2008
Banks and mortgage companies are reporting a surge in mortgage and refinancing applications because of lower interest rates.
''What you have now are consumers who are able to take advantage of darned near historic low mortgage rates,'' said Bill Cosgrove, president of Union National Mortgage Co. in Strongsville and immediate past president of the Ohio Mortgage Bankers Association.
Mortgage applications jumped 51.4 percent nationwide last week over the previous week, according to the national Mortgage Bankers Association. During the same period, the average 30-year fixed-rate mortgage decreased from 5.99 percent to 5.47 percent.
Some local lenders are offering rates of 5.25 percent on 30-year, fixed-rate loans, and at least one is as low as 5
percent.
Further drops in rates could be on the way if the government launches an industry-backed plan to lower the rate on a 30-year mortgage to 4.5 percent by spending hundreds of billions of dollars to buy mortgage-backed securities issued by Fannie Mae and Freddie Mac.
The Ohio mortgage bankers association, which represents about 80 percent of the mortgage-lending business in the state, reported its highest volume of activity in the last five years, Cosgrove said. Specific state statistics were not available.
''We've had some pickup,'' said Stephen Hailer, president and chief executive of North Akron Savings Bank. ''It was one of those things where we have gone from virtually no activity and inquiries to now folks calling.''
Home buyers, especially in Ohio, can get great deals because of the lower rates, depreciated home values and motivated sellers, said Jeff Wherry, executive director of the state association.
''There's no question that those people who are qualified are finding this to be a good time to buy,'' he said.
Homeowners also are looking to refinance into lower rates to save money, with some rolling credit-card or other unsecured debt into their mortgages.
That can be dangerous, though, if people continue to run up the credit-card debt, said Jay Seaton, president of the Consumer Credit Counseling Service of Northeastern Ohio. He advised people not to do that unless they change their behavior and stop accumulating credit-card debt.
Refinancing saves money over the long term. For example, a homeowner with a $100,000 mortgage at 6.5 percent will save about $64 a month by refinancing to 5.5 percent. However, there will be an upfront cost of $1,000 to $1,500 to rewrite the mortgage, meaning there is no payoff for the first few years.
The news about increased mortgage activity comes at the same time the Mortgage Bankers Association is reporting that a record one in 10 American homeowners with a mortgage was either at least a month behind on payments or in foreclosure at the end of September.
The number of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and up from 7.3 percent a year earlier, the group said Friday.
The Beacon Journal guide to local lenders can be found at: http://www.mtgeinfo.com/akron.
Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com. The Associated Press contributed to this article.
Banks and mortgage companies are reporting a surge in mortgage and refinancing applications because of lower interest rates.
Get the full article here.
Comments
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Posted 01:58 PM, 12/06/2008
The overwhelming majority of them unfortunately, won't get approved. You can't give mortgages to deadbeats or people with no money down anymore. And I suspect the ones that are getting approved are refis. I don't know why stories like these are still even being reported....
AKRON, ohio
Posted 07:36 AM, 12/07/2008
it's about time someone started looking at credit scores before handing money out.
Posted 12:35 PM, 12/07/2008
The banks can't win!
If they require good credit borrowers only, then the democrats, minorities and poor credit applicants begin crying and demanding they get a loan too ... then when they do get a loan and go into foreclosure, they turn around and say the banks are predatory.
Weak borrowers do not deserve the same terms as strong borrowers.
