Newsday
October 3, 2003

Refinancing Renaissance;
After spike, rates dip again

By Christian Murray
STAFF WRITER

Five weeks ago, when mortgage rates hit a yearly high, the home-refinancing bonanza seemed all but gone. Now it appears that many homeowners have another chance to get in.

The average interest rate on the 30-year fixed mortgage dropped to 5.77 percent yesterday, down from 6.44 percent right after Labor Day, according to Freddie Mac's weekly survey.

"We will see some families who haven't refinanced who will now apply," said Frank Nothaft, chief economist with Freddie Mac in McLean, Va. But the level of refinancing will be nowhere near what it was in the spring, he added, when interest rates were 5.21 percent, the lowest level in 45 years.

Recently, however, the amount of refinancing activity has picked up, according to Jay Brinkmann, vice president of research and economics for the Mortgage Bankers Association in Washington, D.C. For the week ending Sept. 26, refinancings were up 3 percent.

When interest rates crept up in August, some customers backed away from refinancing deals, said Michael Moskowitz, president of Manhattan-based Equity Now. With the recent drop, "we have been able to close some of them," he said.

Moskowitz said the difference between a 30-year fixed mortgage at 6.44 percent and 5.77 percent is significant. For instance, on a $300,000 loan, the difference represents about $130 per month over the term of the loan. This additional $130 could be the tipping point in determining whether it makes sense for a borrower to pay $4,000 in closing costs typically required to refinance such a loan.

Freddie Mac's Nothaft said he expects interest rates to remain between a 5.75 and 6.25 percent until the end of the year. However, he said much depends on the economic recovery.