Mortgage rates hit 37-year low

SANDUSKY Homeowners and homebuyers finally received some good news -- the 30-year fixed mortgage rat
jasonsinger
May 24, 2010

 

SANDUSKY

Homeowners and homebuyers finally received some good news -- the 30-year fixed mortgage rate has sagged to its lowest point in 37 years.

The rate dropped from 5.14 to 5.10 percent, having steadily declined every week since the end of October, according to the Freddie Mac Primary Mortgage Market Survey.

The 15-year fixed rate also dipped to 4.83 percent this week, which is its lowestmark since March 2004.

Local brokers said the favorable rates have sent Firelands residents scurrying to refinance their mortgages.

"In the few weeks before Christmas, applications (to refinance) probably quadrupled," said Dan Cummings, owner of Cummings Mortgage Services here in Sandusky. "It may have even increased 10-fold."

A National City spokeswoman said the increase in mortgage refinancing applications "has been crazy" though she declined to give exact figures.

Cummings said he normally receives two or three applications per week, but has recently received upward of 20 per week.

And he said he expects activity to pick up even more now that the holiday season has ended.

"Speaking from experience, once people get through the holidays and deal with all those expenses, that's when they start considering refinancing," he said.

But Cummings, who has been a broker in Erie County since 1967, said low-interest rates can be misleading.

He said only people with excellent credit scores -- "in the 740 range" -- will get the 5.10 percent rate. People with mediocre credit scores in the 600s might have to pay a full point higher.

"It used to be everybody got the same rate," he said. "But now everything is based on credit scores."

For some people, refinancing might not make any sense because you have to pay fees, local brokers said. Because of those fees, unless you can get a significantly lower rate than your current rate, you might not actually save money.

But the new year brought other good news as well, this time for potential homeowners.

According to the National Association of Realtors, the Housing Affordability Index in the Midwest is the highest it's been this decade. In December, it was 184.3.

The index measures the ability of U.S. families to buy houses, based on home prices and the median income in a particular area.

An index of more than 100 means families who earn the median income have more than enough money to buy a home; an index of less than 100 means those families can't afford homes.

In Sandusky, the median income for a family is $37,749. Consequently, if someone makes more than that, they can afford a house in the city.

Jeffrey Berquist, who owns Prudential Stadtmiller Realty in Sandusky, said he hasn't seen an increase of interest in homeownership yet, but he expects to soon.

"Historically, once we get past Thanksgiving or the first snowfall, people don't really look at homeownership," he said. "It doesn't happen until after the new year."

Berquist's company is hosting a "Reverse Open House" on Jan. 11 to advertise the affordability of homes in the area.

People can come to his office, located at 1212 Hull Road, and lenders will sit with interested buyers, examine their finances and determine what they can afford.

Then Berquist will drive the buyers to all the potential houses in the area that fall in the buyer's price range.

"No one's ever tried that, but we thought it sounded like a good idea," he said.