Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 9, 1994 TAG: 9402090217
SECTION: BUSINESS PAGE: C-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
"It's not a huge increase. The rates are still generally low," said Robert Van Order, chief economist for the Federal Home Loan Mortgage Co.
The rate on the popular 30-year fixed-rate loan has risen about a quarter percentage point to 7.29 percent since Friday, according to HSH Associates, a Butler, N.J.-based mortgage research firm. The rate on one-year adjustable rate mortgages rose from 4.2 percent to 4.43 percent, the firm said.
The moves followed Friday's announcement by Fed Chairman Alan Greenspan that the central bank increased a key measure of short-term rates for the first time in five years.
The Fed nudged the federal funds rate - the interest banks charge each other for overnight loans - up 0.25 percentage point to a target of 3.25 percent. It described the move as an attempt to tame inflationary pressures in the economy.
Bankers thought mortgage rates already had hit bottom - the 30-year rate was at a 25-year low of 6.74 percent in October. Even after the Fed move, many bankers predicted rates should remain fairly stable, fluctuating in the 7.5 percent to 8 percent range.
"The worst we're expecting this year would be 8 percent. If you told people three years ago that they'd be getting an 8 percent mortgage, they'd come screaming out of the woodwork," said Keith T. Gumbinger, an analyst with HSH Associates.
Some bankers said it was too early to judge the effects of the Fed's decision, while others reported a definite increase in business following the news from buyers who wanted to lock in rates before they rise further.
Rick Cossano, executive vice president of Countrywide Funding of Pasadena, Ca., a major mortgage banker, said there was "a significant increase in application volume just in this last week."
"This is due, in part, because the public is panicking a bit," Cossano said Tuesday. "Those people who have not refinanced are taking action now."
Doug Williams, a regional mortgage banking executive at Chase Manhattan Bank in New York, said fixed-rate loans will remain popular, assuming interest rates don't rise dramatically.
\ Mortgage rates in Roanoke
Steve Reeves, assistant vice president, First Union Mortgage: I think the market's still real good. It appears our rates are starting to stabilize. I don't see a long-term trend. The increase was fairly nominal. I think it's going to settle down.
Michael Hincker, Roanoke manager, Mortgage Service America: Since Thursday's rates, our quotes have gone up about 1 point. The market went to that level Friday and it was up a little Monday. That 1 point virtually overnight added $1,000 on closing costs. But rates were extremely low to begin with. You still have a 30-year fixed-rate loan with no points for 7 percent. I don't anticipate any more movement. Rates should stay low throughout the year.
Jim Chidester, Roanoke manager, Crestar Mortgage Corp.: With any luck, the rates will stay down. The Fed adjusted their short-term rates, but not long-term rates. But I don't see them recovering in the very near future. Anyone interested in a loan should probably look into it very seriously right now, because rates probably won't go down soon. But they are still at very reasonable levels.
by CNB