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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (8075)	1/12/2003 5:33:08 PM
From: calgal	Read Replies (1) \| Respond to of 306849

Demand for Home Refinancing Still Strong URL:http://www.foxnews.com/story/0,2933,75219,00.html Friday, January 10, 2003 NEW YORK — Recent historic lows in mortgage rates are encouraging even more refinancing, dashing any expectations that the refinance tide will ebb anytime soon. A limping economy and talk of war with Iraq have tugged mortgage rates below 6 percent for three consecutive weeks for the first time ever, allowing anyone who has not cut their borrowing costs the opportunity to refinance their home loan. One such homeowner is Bob King, who runs a not-for-profit auditing firm in Milwaukee. He was drawn to refinance by recent three-decade lows mortgage rates, and wanted to lock them in before they rise. King does nkon that rates can move lower, but some economists disagree. When the economic outlook is looking doubtful, investors flock to the safety of bond investments, pulling borrowing rates lower. Global unrest is not expected to go away soon and could bring rates to new lows, said Christopher Low, chief economist at FTN Financial in New York. Rates won't likely plummet, but they could drift down slowly, economists said. "It's a game of inches," said Vince Boberski, head of bond research at RBC Dain Rauscher in Chicago. But lower rates are pushing consumers to refinance. Industry trade group The Mortgage Bankers Association of America found in a recent survey of lenders that demand for refinancings was up 160 percent from a year ago. Also, refinancings accounted for 8 out of every 10 loan applications. In recent weeks, Freddie Mac said that the rate for the most popular home loan in the U.S., the 30-year mortgage, fell to 5.85 percent, a low not seen since 1965. These rates have since risen slightly, but their loitering below 6 percent is a historic first that keeps the refinance business heated. The biggest refinancing spree in U.S. history will end, but with rates having reached new lows, it's not over yet and may wash into the second half of this year. Mortgage lenders are finding that some borrowers are coming back for a second and third time within a year to refinance their home loans. "At some point every loan in America has been refinanced," quipped Rob Couch, president and chief executive officer of New South Federal Savings Bank, based in Birmingham, Alabama. Close to half of the loan applications at New South Federal are related to refinancings. "You are seeing that the refinancing boon is continuing. The consumer is much more aware of rates. They are much more sensitive to how a drop in mortgage rates can affect their payments," said Couch. Low borrowing costs have been a crucial support for a wobbly U.S. economy because they have encouraged demand for homes which, in turn, encourages spending. Refinancing helps homeowners save on monthly mortgage loan payments and pull equity out of their homes, which also supports spending. A report commissioned by the Homeownership Alliance, a housing trade group, found last year that mortgage refinancings helped fuel a fifth of the real growth in the economy since 2000. While demand for refinancings and loans to buy homes has been hectic, mortgage bankers do not expect that pace to continue indefinitely. "I'd be surprised if we have a third record-breaking year," said Doug Perry, first vice president at Countrywide Home Loans in Calabasas, California, who, nonetheless, believes home purchases and refinancings will remain lively this year.