Interest rates dip slightly

Interest for 30-year mortgages dipped last week to equal the lowest in six weeks. These lower rates not only encourage those looking for homes, but have caused refinancing applications to increase as well. While applications for new mortgages increased 1.3 percent, refinancing applications increased 6.9 percent over the previous week according to the Mortgage Bankers Association. Freddie Mac reports that the average rate for a 30-year fixed loan last week was 4.27 percent, down from 4.34 percent the prior week. Still, that rate is .86 percent higher than last year at this time.

Homebuyers who are encouraged by the drop still face competition from some buyers willing to pay cash. With interest on savings accounts at less than 1 percent, paying cash makes a lot of sense for those who can, even with low mortgage rates. For some, without the savings to pay cash, a 15-year mortgage can provide significant savings. The 15-year rates last week dipped to 3.33 percent from 3.8 the previous week. A year ago that mortgage rate was 2.64 or .74 percent lower than the current rate.

These new rates may seem high to those who have been considering a home purchase for more than a year and in fact, they are. We remind you again though that it was only a couple of years ago that the average 30-year mortgage was higher. In April 2011 the average was 5.13 percent. By 2012 that rate had dropped to 4.21 percent. The 15-year loan then was 3.52 so by comparison, we are still enjoying very low rates.

Our local real estate market continues to see improvement too, with member agents reporting good to very good activity in a variety of price ranges. National reports seem to indicate a return of the vacation homebuyer as well and many of our local agents are showing and selling properties to out of state buyers whose home markets have allowed them to build equity and encouraged them to reach out of their geography to capitalize on some perceived bargains here in North Idaho.

Realtor magazine reports that an additional four million homes have gained enough equity to rise above their "underwater" status. Quoting from an article last week in that publication: "The plight of the underwater borrower has improved dramatically since negative equity peaked in December 2009 when more than 12 million mortgaged home owners were underwater. Over the past four years, more than 5.5 million home owners have regained equity, reducing their risk of foreclosure and unlocking pent-up supply in the housing market."

This is one driving factor in the increase of refinancing as many homeowners are tapping into their new equity positions by borrowing against it for home improvement or debt consolidation. Not to worry though. Unlike the borrowing frenzy that was a part of the housing boom, equity loans are more difficult to get. While home equity lines of credit are back on the rise, homeowners getting approved tend to have higher credit scores and must show ample savings and equity in their homes.

Perhaps this is just another sign of a healthy real estate market. At any rate, the reports of recent activity among our member agents is encouraging to us and we believe we are out of the woods. People are buying with much more confidence that real estate is once again that appreciating asset their parents reminisced about.

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.