Pending sales on Long Island dropped to 1,257 in November,...

Pending sales on Long Island dropped to 1,257 in November, a 13.7 percent decline from 2011. Credit: Getty Images

It’s like a limbo game – how low can interest rates go?

During the past seven days and for the third week in a row, mortgage rates broke records, Freddie Mac reported Thursday. The rate was 4.57 percent for 30-year, fixed-rate mortgages, an all-time low during the 39 years that the mortgage finance giant has been tracking the weekly rates.

As the general public gets this news, the refinance boom will likely go beyond what the Mortgage Bankers Association reported Wednesday: Refinance applications made up almost 79 percent of all mortgage applications last week.

“What’s a boom on steroids?” said chief economist Bob Walters at Quicken Loans, a major online lender. “We’d have a refi explosion at four and a half.”

But in real time, rates have already inched up in the last few days from the 4.57 percent low to a range of 4.625 percent to 4.75 percent, Walters said. That’s the rate without having to buy points and for people with great credit, he said.

Whether the rates will go up or down in the next week or so, Walters is quitting the business of forecasting rates because he’s had to re-evaluate his position about how low they’d go. Quicken Loans has been doing up to 4,000 credit checks daily on refinance applicants, ever since the 30-year, fixed rate fell below 4.75 percent with no points, the economist said.

“That was the magic demarcation, where the volume went from pretty darn good to Katie bar the door,” Walters said. “What that does is people who are at 5.3 or 5.4, all of a sudden it makes sense for them to refinance again. These were people, and I was among them, who thought ‘Five percent, five and a quarter, that’s as low as it’s ever going to get. You’re going to burn this mortgage some day.’ And sure enough, that’s not the case. How long will this last? We’ll see.”

Several Long Island lenders said they don’t focus on refinance business. That’s because of the high “fallout” among applicants – when the rates go down, they scrap their refinance plans.

That’s why, despite the all-time low rates, refinancing has remained about 30 percent of the annual business for the past three years at Mortgage Concepts in Bohemia, said its chief executive, Steven A. Milner.

Milner said he tells his sales people to focus on home purchase mortgages rather than refinancing requests: “You can’t just sit back and be an order taker.”

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