Interest rate changes should not affect market
Steamboat Springs — Interest rates on long-term mortgages may have increased in recent months, but local lenders said they do not think that will prevent people from buying houses in Steamboat.
“I don’t think it is going to have an effect. Houses will continue to sell in Steamboat. It will pick up with the busiest selling season on the way,” said Gil Lang, a mortgage officer of Vectra Bank.
Lang describe the hike in interest rates as “nothing that is going to take dinner off the table.” He said it would be about $17 more a month on a long-term loan for $100,000.
Menyoun Spruill at Homebuyers Mortgage said that the increase from 6.5 percent to 6.875 percent that she has seen would mean paying $64 more a month on a $200,000 loan.
Despite the quarter to half a percent increase, interest rates between 6.5 and 7.5 percent are still good, lenders said, and they do not think it will turn away potential homebuyers.
After Sept. 11, rates fell to an all-time low. But as the economy began to rebound at the beginning of the year, rates predictably began to rise again, Spruill said.
“When the economy is getting worse is precisely when interest rates go down. And, when the recession is over that is when everything starts going up,” Spruill said.
Steamboat lenders, are expecting mortgages rates to remain steady.
“Actually, we’ve been extremely busy for this time of year. People are definitely buying,” Spruill said.
After Sept. 11, Sherry Carter from Wells Fargo Home Mortgage said many homeowners took advantage of refinancing as rates dropped.
“I think everybody has refinanced. I’ve done so many refinances over the years. It’s amazing. In 1998 they were down so low and 2001, after Sept. 11, it was down so low again. Both were big dips and a lot of refinancing was done then,” Carter said.
Refinancing has slowed since the beginning of the year, but Lang said it would still be profitable to refinance loans if the current rate is more than a point lower than the loan.
Carter recalled that when she started working with mortgage loans in the early 1990’s rates were at 10 percent. With the low rates, Carter said people could refinance loans for home equity and still consolidate credit.
The slight drop in mortgage rates in the last two weeks can be linked to the change in perception of the Federal Reserve Board’s next move.
Long-term rates had been increasing in the last few months with the expectation that the Fed would increase the short-term interest rate as the country returned to economic stability. But in the last few weeks, mortgages slipped when perception mounted that the Fed would wait until at least June for an interest hike.
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