Mortgage Refinancing Up Sharply; Fixed-Rate Loans Gain Renewed Interest
A steady decline in interest rates has sparked a surge in mortgage refinancings, especially among homeowners who are trying to escape costly adjustable-rate loans for the security of single-digit fixed-rate mortgages.</br></br>In recent weeks, mortgage rates have dropped to less than 10 percent for the first time in a year. Some lenders now offer 30-year, fixed-rate mortgages for as low as 9 1/2 percent. In April, these rates were about a full percentage point higher.</br></br>The lower rates have prompted some homeowners with higher-rate loans to reduce the cost of their monthly mortgage payments by refinancing.</br></br>Although the rise in refinancings has not approached the magnitude of the activity that occurred in 1986 and early 1987, when more than half the loans made were to refinance existing mortgages, many Washington-area lenders have experienced a two- to four-fold jump in the number of borrowers refinancing their homes.</br></br>"There's been a definite increase in business and it's coming from refinances," said David Hershman, regional vice president of ICA Mortgage. "Refinancings were non- existent four months ago. Now they're making up 30 percent of our volume."