Local News

Mortgage brokers seeing more refinancing

Posted November 26, 2008 6:33 p.m. EST
Updated November 26, 2008 8:21 p.m. EST

— New numbers out Wednesday show national sales of new homes are at their lowest point in 18 years. But when it comes to pre-owned, the days of bargain hunting here may be over.

The Federal Home Finance Agency reports prices are still down, but home values are on the rise.

In Raleigh and Cary, for example, they rose nearly 4 percent over the past year. Home values in Durham rose 1.5 percent, and in Fayetteville, they rose 1.4 percent.

Instead of looking for a new home, plenty of people are getting a new loan. Mortgage brokers say they are seeing a rush of people as rates drop.

Their holiday hope is that it continues.

The 30-yeaf fixed mortgage rate fell 5.5. percent to about 5.5 percent on Tuesday flurrying a refinancing.

It was a one-day drop of about .5 to .75 points on mortgage rates, down to around 5.5 percent.

It's ticked up a bit Wednesday, but lenders hope the shift will motivate those who want to buy and those who want to refinance.

The Esterline family saw the chance and jumped at it.

After buying a home in the Triangle a year ago at 6.375 percent, they refinanced at 5.5 percent for a 30-year fixed rate with DNJ Mortgage.

"We just thought that if we could save a couple hundred dollars, it's worth doing," said Kami Esterline. "It's been a really easy process."

The Esterlines are not alone.

The sudden drop in mortgage rates is driving a lot of business to brokers – with many doing the most deals of the year.

"We locked in 114 loans at $23 million in one day," said Jeffrey Burgess, president of Equity Services Inc. in Raleigh.

Burgess calls it an early Christmas gift after a volatile year.

"Business was slow," he said. "There was a lack of deal flow."

DNJ Chief Operating Officer Glenn Astolfi hopes the rate drop lasts, not only driving up refinancing but also home sales. He says word of a tighter lending market is misunderstood.

"Folks with good credit, equity in the house, you're not going to have a problem," he said.

And brokers like the signs.

"I think long-term interest rates have to go lower to stimulate the economy," Burgess said.

"We've heard about all those huge companies getting billions of dollars," Astolfi said. "This is one of the first things we've seen that translates down to the average consumer, help them save some money."

Brokers say another recent trend in mortgages is that more borrowers are steering away from conventional loans and going to government-backed products such as Federal Housing Administration and VA loans.