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Interest rates are going through the floor

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A "For Sale," sign is displayed outside a home in Oakland, Calif., Monday, June 28, 2010. Home prices in April rose for the first time in seven months as government tax credits bolstered the housing market. But the rebound may be short-lived now that the incentives have expired.(AP Photo/Paul Sakuma) Photo Credit: AP Photo/Paul Sakuma

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

During the past seven days, for the third week in a row, mortgage rates broke records, Freddie Mac reported Thursday. The interest 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.


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As the general public gets this news, the refinance boom will likely go beyond what the Mortgage Bankers Association reported Wednesday that 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 rethink several times about how low they’d go. Quicken Loans has been doing credit checks on up to 4,000 refinance applicants daily, 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,” Walter said. “What that does is people who are at 5.3 or 5.4, all of 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 this will last? We’ll see.”

Several Long Island lenders said they don’t focus on refinance business. That’s because of the high “fall out” 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, left.

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.”


 >> PHOTOS: A rental with amenities
>> PHOTOS: If you want a house for $315,000
>> Selling tips: Expert advice to help you sell your home
>> Buying tips: Pointers to help you navigate the process
>> Find your dream home.
 


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