Friday, September 2, 2005

Mortgage rates take another dip

Real-estate experts see 'a great opportunity' for many homeowners to refinance.

By MARY ANN MILBOURN

The Orange County Register

Time to lock in.

That's the word from mortgage and real-estate experts after mortgage rates dropped again this week to lows not seen since early July.

With the Federal Reserve raising short-term interest rates, many experts expected that by now Orange County mortgage rates would be far above 5.428 percent, the average this week for a 30-year, fixed-rate loan with a fee of one point. That's just a shade above the rate this time last year.

"This is a great opportunity for a lot of people," said Dave Gaylord, a mortgage broker at Loan Link Financial , an Aliso Viejo loan brokerage. "It's a low we haven't seen but once or twice this year."

Martha Burgoon, a broker associate at Century 21 Superstars in Rancho Santa Margarita, said she's not sure people understand that this might be a last opportunity to get a rate this low. "We're trying to do what we can to get the word out," she said.

People who should refinance at today's low rates include homeowners with home-equity lines of credit, said Randy Johnson, a broker at Independence Mortgage Co. in Newport Beach. Rates on those lines of credit, called HELOCs, have been rising in line with Fed rate increases, he said. Those credit lines are tied to the prime rate, now 6.5 percent. "When HELOCs were 3 percent, they looked like a good deal, but not now," Johnson said.

One of his clients had a HELOC at two points above the prime rate, he said. "It was at 8 percent, and we're refinancing her down to 5 percent," he said.

Others who might want to lock in are people with adjustable-rate loans. Although local rates inched down to 3.544 percent this week on a one-year ARM, experts said it wasn't worth the gamble that rates would be this low again at this time next year, when that rate would possibly be much higher.