With average long-term U.S. mortgage rates remaining close to historically low levels and the spring home-buying season underway, local mortgage brokers are reporting a surge of refinance and purchase applications.
Chris Salese, branch manager at Del Sur Mortgage, said the number of mortgage applications received by his company has doubled over last year.
“We didn’t anticipate rates to stay where they are at for this long,” he said. “It triggered a huge wave” of applications.
Mortgage giant Freddie Mac said Thursday the national average for a 30-year fixed-rate mortgage ticked up to 3.70 percent from 3.69 percent the previous week.
The average rate for a 15-year mortgage, popular with homeowners who refinance, edged up to 2.98 percent from 2.97 percent.
A year ago, the average 30-year mortgage rate was 4.41 percent and the 15-year mortgage rate was 3.47 percent. Mortgage rates have remained low even though the Federal Reserve in October ended its monthly bond purchases, designed to hold down long-term rates. The Fed signaled recently that it’s still not ready to start raising short-term rates after keeping them near zero for more than six years.
According to local loan officers, in addition to those low rates, other factors have contributed to the increased demand.
Although appreciation has slowed somewhat in recent months, home values in Napa County have risen in past years, said Dale DiGennaro of Custom Lending Group, Inc.
“Some people couldn’t refinance previously because they were underwater,” and the value of their home was at the amount of the mortgage or lower, he said. “Once they get the equity, they can refinance.”
That can also lead to more home sales, he added, which leads to an increase in mortgage applications.
He’s seeing a 70 percent increase in mortgage applications at his business, said DiGennaro.
Another factor that’s impacting the increase is that the Federal Housing Administration (FHA) mortgage insurance premium dropped by a half percent. Today, some of those with FHA loans are refinancing to get a slightly better interest rate and a reduction in their mortgage insurance premium, he said.
Laura Miller, a loan officer with Benchmark Mortgage, said she’s seen the number of mortgage applications double. “People were on the fence, uncertain as to whether or not prices were going to start improving,” she said. With home prices increasing, “now they’re off the fence and want to purchase before it gets too expensive.”
And with mortgage rates remaining lower, “they can afford a little bit more of a home.”
Lower rates, decreased local unemployment and an improving economy “couldn’t be a better recipe for helping homeowners save money, and stay in their homes for the long run,” Miller said.
Salese said another factor is increased chatter about when the Fed will raise rates — and if they do, by how much. “Despite the fact that the Fed rate decisions don’t necessarily have a direct impact on rates for 30-year fixed mortgages, nonetheless this has naturally caused a sense of urgency for homeowners to refinance.”
Also, Napa is “shaking off the earthquake blues,” and people want to “stay put, hunker down and improve their homes.”
Salese also asked that refinance customers have patience with their lenders. The flood of refinance applications means a process that normally takes 30 to 45 days can now take as long as 60 to 75 days.
More Americans signed contracts to buy homes in February, the National Association of Realtors reported, providing evidence that the buying season could open strong after sluggish sales for much of the winter.
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Its time to capitalize on 2015’s housing market opportunities
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