Interest rates for borrowers were low in January but have been creeping back up
Homeowners often look at refinancing their mortgages as a way to save money, but some people may have missed a brief window of opportunity in January to do so.
“The rates have crept up now, so this kind of refinance boom has gone away,” said Brad Church, the president of Bradford Mortgage in Winston-Salem.
There was a flurry of refinancing-application activity around the country last month as interest rates dropped.
A weekly survey of mortgage applications by the Mortgage Bankers Association showed the Market Composite Index, a measure of mortgage-loan application volume, was 981.5 the week ending Jan. 18. At the time, refinance applications were up 92 percent since the beginning of November and purchase applications were up 7 percent. The average contract interest rate for 30-year, fixed-rate mortgages was 5.49 percent.
But interest rates have been rising since then.
The Market Composite Index was 665.1 for the week ending Feb. 22, a decrease of 19.2 percent, on a seasonally adjusted basis, from 822.8 a week earlier.
The refinance share of mortgage activity decreased to 52 percent of total applications from 61.7 percent the previous week. And the average contract interest rate for 30-year, fixed-rate mortgages increased to 6.27 percent from 6.09 percent the previous week.
Although Southern Community Bank and Trust in Winston-Salem said it is still seeing people wanting to refinance mortgages, some local banks and mortgage companies said that interest in refinancing has slowed this month.
Bradford, an independent mortgage company in Winston-Salem, was getting more people in January with mortgages less than a year old who wanted to refinance to lower rates, with the majority refinancing to fixed rates, Church said.
Now, though, “we’re really at a point where a refinance doesn’t make sense for most folks,” he said.
Cory Tarr, a residential mortgage-loan officer for Bank of North Carolina in Winston-Salem, said that people need to look at their own situations and determine the right time to refinance.
“Many factors should be considered when looking to refinance, most especially, ‘Is it going to benefit your current financial situation?’” he said.
Historically, interest rates are still low.
Church said that rates were 11 percent or more when he entered the mortgage business in 1986.
“From a refinance prospective, we’re probably settling back into normal times where about 20 percent or 30 percent volume for mortgage bankers is refinances,” he said.
He also said that with all the current subprime-mortgage issues, some people believe that mortgages are difficult to get. He said that is not true.
“If you’ve got money to put down and make a down payment and you’ve got a good job, you can get a good value on a house today because you have motivated sellers,” he said.
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