Springs sees drop in mortgage rates

Mortgage rates continue to drop in Colorado Springs despite a Federal Reserve decision Wednesday not to cut interest rates.

Mortgage rates move independently of the short-term rates controlled by the Fed, and instead tend to parallel rates on long- term U.S. Treasury securities, which have been declining in recent days after rising for the previous two months.

Low mortgage rates have been credited for a relatively strong national and local housing market, which, despite some slowing, generally has defied the gravity of a recessionary economy.

For homeowners, low mortgage rates permit refinancing existing loans. They also make it easier for home buyers to qualify for larger loans, or buy their first home.

Lower rates also are a boost for the housing industry, which has been hurt by a slowing local economy.

Mortgage rates dropped Wednesday to 63/4 percent with no discount points at several major local mortgage lenders. That could trigger another round of refinancing by local homeowners looking to lower monthly payments, lenders say.

"We may be close to the bottom of where rates are likely to go, so it is a good time to refinance if you haven't already done so," said Steve Stingley, president of Colorado Springs-based Peoples Mortgage Corp., one of the largest mortgage lenders in El Paso County.

Stingley said homeowners should investigate refinancing if prevailing rates are at least one-half percentage point below the rate on their current mortgage. They should compare how much they will cut their monthly payment with the fees they will pay to get the new loan.

Norm Peterson, president of Intermountain Bank and longtime leader in the local mortgage industry, said refinancing is generally a good idea if the reduced monthly payments allow a homeowner to recoup the fees and other costs within three years of taking out the loan.

"It really depends on how long you plan to stay in the home. If you are planning to move in a year or two, refinancing doesn't make much sense," Peterson said. "While rates were somewhat lower last year, this historically is still a very good rate."

Mortgage rates also tend to head lower when stock prices are falling, said Michael Humecki, a loan officer for First Horizon Home Loan Corp. That's because investors are putting money into bonds, which makes more money available for mortgages and pushes rates lower.

If rates stay low, the local housing market likely will benefit, said Rich Noble, president of the Colorado Springs division of U.S. Home Corp. New home sales have remained strong this year despite the economy and more than 5,000 layoffs in the past 13 months.

"We have hit our business plan two months in a row and (projections for) February are looking good. The start of the year has been encouraging," Noble said.

- Wayne Heilman may be reached at 636-0234 or wayneh@gazette.com

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