Rates low, lenders slow

Many are enjoying the newer, lower mortgage rates it seems, but now borrowers are vying for lenders' time as they compete with those refinancing to take advantage of the lowest rates in history. A quick search of the Idaho Housing and Finance Association website on Friday shows them proudly displaying a 30-year fixed mortgage rate of 3.09 percent with an APR of just 3.2 percent. This is the rate for IHFA loans which follow the rates set by the Federal Housing Administration and are not available to everyone.

The average commercial bank rate sunk again last week to an average of 3.4 percent according to Freddie Mac, the government sponsored enterprise that purchases many of these loans. That beats the previous week's low of 3.49 percent and has gained further attention from those who have held higher rate mortgages for some time as they rally 'round the rates to refinance for lower monthly payments.

Frank Nothaft, vice president and chief economist for Freddie Mac said, "The share of borrowers shortening their amortization terms is at its highest level in six years. In the second quarter of this year, 30 percent of borrowers who originally held a 30-year fixed rate loan refinanced into a 15 or 20-year Fixed Rate Mortgage." Rates for those 15-year loans on average last week were at 2.73 percent, down from the previous record of 2.77 percent a week earlier.

Of course there are only so many loan originators and underwriters to go around, so new buyers have to compete with those refinancing for their time. This can be frustrating to many, who after getting approved for a loan, then finding a home, have to wait and often re-document their status and extend their closing time in part due to the work load of some lenders.

New regulations governing lenders can also impede the process as lenders adjust to a new way of doing things. Strict adherence to the terms given in a Good Faith Estimate and previous liberal loan practices often compel these lenders to re-evaluate the borrower's status to make sure nothing has changed. Any change in borrower's status is scrutinized more carefully than in recent history and could result in different loan terms than originally approved if not resulting in outright denial. A change in loan terms requires new waiting periods and provides the borrower with a new opportunity to rescind so many Realtors are finding that at least some of their transactions fail to close.

Even so the slower process has not dampened the market. There are still plenty of people shopping for homes and buyers of lower priced homes often find themselves competing and in many cases increasing their offers. There are many stories of multiple offers, especially in homes priced under $150,000. Investors too, continue to buy homes for rental properties as lower interest makes real estate investing a lower risk option than other investment vehicles which of course puts upward pressure on prices.

This pressure on lower priced inventory is evident in prices as nationally, median prices rose to five-year highs earlier this year. As we reported here weeks ago, our local inventory is nearly 13 percent below last year and our median price is up by 6 percent. Although our median is well below the national average its upward movement may well continue with cheaper interest rates allowing more people to afford more home.

Most of our full time agents are finding themselves busy and many report delays in getting their transactions closed due to longer processing times and repeated requests for documentation by lenders.

After the loan debacle that created the housing boom, no-one is questioning the extra care lenders are taking, but we are still getting used to the longer transaction times.

Trust an expert...call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.