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Homeowners should look into refinancing their mortgage to take advantage of the lowest interest rate in decades, four industry experts said yesterday.

However, with numerous analysts predicting that mortgage rates will drop even lower in the near future — one mortgage broker estimated that rates might be as low as 3.5 percent in 6 months — some homeowners are likely holding off to see what happens.

“I think the market is too volatile to play the risk,” argued Brian Quigley, a mortgage broker since 2003. “I think that rates are low enough right now that people should act.”

“It’s hard to predict what way (rates) are going to go from now,” agreed Chris Henrichsen of Equity Lending. “The rates are good now, but people can always hold out for the unknown.”

Record lows

Mortgage rates have been approaching record lows, with the national average 30-year fixed-rate mortgage falling to 5.11 percent and the 15-year fixed-rate dropping to 4.73 percent yesterday, according to BankRate.com. In the same time period last year, the 30-year rate was 5.87 percent and the 15-year rate was 5.68 percent, according to Mortgage~x.com. 

The federal government recently bought back mortgage backed securities in hopes of settling the housing market, but the mortgage rate has seemingly not responded.  

“Whenever the government tries to interject and do something, the numbers move the other way,” said Henrichsen.

Homeowners with low closing costs and good credit and equity are poised to save a significant amount of money by refinancing their mortgage to a lower rate, according to the mortgage brokers. Quigley said dropping a percentage point or two could save some homeowners over $100,000 in the long term.

But not everyone is so lucky. The advertised low interest rate likely won’t be a saving grace for the recently unemployed or lower income groups with imperfect credit because they don’t have the income to qualify for the new loan, said Henrichsen.

“The rich get richer and the poor get poorer,” he said. 

More than rates

The low interest rates should be just one consideration of homeowners, according to Terry Jones of the Colorado Mortgage Lenders Association (CMLA), the group that represent companies in the Colorado mortgage lending industry. The CMLA president said people should consider the type of mortgage they have, the term of the loan and if their mortgage broker is licensed and trustworthy.

Jones agreed that there is “no crystal ball” to see where mortgage rates are heading, adding that he hopes the new congress will take control of the economic agenda head on to help stabilize the market.

“This is probably one of the more volatile times in my career in the mortgage business,” said Jones. “But at the same time for first time home buyers, it’s a time of almost unprecedented opportunity to get lower interest rates and lower home prices. The affordability for first time home buyers is probably as good as it has ever been.”

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