Bargain basement mortgage rates get bank phones ringing
Mortgage rates fell to near-record lows this week: The nationwide average for a 30-year fixed rate mortgage is 4.3% according to Freddie Mac. Rates that low are proving to be catnip to consumers in an otherwise dismal week.
Given the country's downgraded credit rating and the turbulence on Wall Street, it's not surprising to hear someone in the financial services industry say this:
"In the last few days, it's amazing how the phone is ringing."
The surprising part is that that's a good thing.
"Our business has picked up about 25% in one week and it looks like it may pick up more than that," says Donn Contra of Spokane-based Sterling Savings Bank.
He says the magic combination of low home prices and low mortgage rates is behind the calls.
But don't expect a sudden housing recovery. For one thing, banks are now a lot pickier about who they loan to. And even though mortgage applications are up nationwide, the increase is driven by people refinancing.
Contra notes that an unusual number of the applications are for shorter 15 and 10-year loans. He suspects people see paying off debt as a better use of their money than investing it in an uninspiring market.