Lower rates prompt mortgage refinancings

Refinancing accounted for almost 79 percent of mortgage applications last week, the highest share in more than a year as interest rates continue to sink to record lows, the Mortgage Bankers Association reported Wednesday.

"As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high," said Michael Fratantoni, the group's vice president of research and economics.

Last week, for the second straight week and after bad economic news, the cost of lending broke records, with the 30-year fixed rate hitting a 40-year low of 4.58 percent.

At Quicken Loans, a national online lender, the number of refinance applications doubled in the past month and the flood of calls started after rates fell below 5 percent, said chief economist Bob Walters. Applications are taken from up to 4,000 prescreened borrowers daily, he said.

"It's all we can do to answer the phones," Walters added.

Local lenders report phones are ringing more over refinancings, but not off the hook.

At Mortgage Concepts, a Bohemia-based mortgage banker, loan sales officer Edward Lippert said Wednesday inquiries doubled in the past month, but he had to "put off for the future" about 80 percent of callers, partly because mortgage insurance is rarely available for those with less than 15 percent equity in their homes.

"If they have not been in their homes for 10 years or put down a major deposit at the time of purchase, people don't have room to refinance," he said.

Also, new laws require lenders to make sure refinancing has a "tangible" benefit to the borrower to avoid a repeat of the years when many ended up with higher rates and monthly payments.

Refinancing made sense for Deer Park homeowner Karen Norris, who had a $120,000 mortgage, a lot of equity and a new roof, which almost depleted her savings. A week ago, quicker than she expected, she closed on a $140,000, 30-year loan, going from a 5.625 percent rate to 4.875 percent, and replenishing her savings.

"I didn't realize the rates had gone down so low," said Norris, a financial analyst. "I said, 'Oh my God, I can continue to pay what I'm paying each month toward my mortgage and taxes and . . . be able to take some money out.' "

And just in time, too. Her central air-conditioning system broke down last Thursday, forcing her and her three children to sleep in the only room with a wall unit, her bedroom. Replacement estimates have run up to $12,000, she said.

In the past few months at Continental Home Loans in Melville, refinance closings rose from 20 percent of the business to 30 percent, with a good chunk from adjustable- rate borrowers refinancing into fixed rates, company chief Mike McHugh said.

The pool of refinance applicants has shrunk over the past two years as rates fell, he said: "Those that had the equity and could refi, a lot of them did."