Refinance Rush: Homeowners with good credit scores are poised to capitalize on the lowest rates in years

Goodbye, 2008! Hello, 2009 and to low Mortgage rates!

Rates on a 30-year, fixed-rate loan are hovering around 4.75 percent - the lowest level since Freddie Mac began tracking rates in 1971.

The better news is some economists predict a further slide in rates once Barack Obama becomes President and introduces his economic rescue plan.

That is good news to Vermilion Parish homeowners because it could mean thousands of dollars in savings.

The word is out about the low interest rates. Banks and mortgage companies are busy this month with people wanting to refinance their existing mortgage loan or new home buyers in search of their dream home.

The low interest rate cuts a monthly note by as much as $150 a month, depending on the amount of the loan, or shaves years off of an existing loan.

Abbeville Building and Loan is in the mortgage business and according to CEO Noel Bajat, the bank has appointments scheduled for almost the entire month with people wanting to either refinance or take out a new loan.
His loan officers have appointments throughout the day for the next three weeks.

“We will probably have one of our largest months in a number of years in closing,” Bajat said.

Bajat said people who have loans with an interest rate 5.5 percent or above are the ones refinancing. To get the low interest loan, he added, one must have good credit and a credit score of around 700 or higher. However, he added the majority of people who are refinancing are qualifying for the low interest rate.

Three years ago rates dropped to around five percent, but Bajat said business was not as good then as it is now.

How long will the low rates last?

Bajat predicts it could last throughout the year, based on what the future President is saying in his speeches. Bajat said Obama said he would like interest rates to drop to the low four percent or even in the threes. He predicts finance companies and banks will be busy in 2009 due to the low interest rates.

“Anyone who deals in residential markets right now will have a heck of a time keeping up,” he added.

Banks are not the only business in the Parish benefiting from the refinancing. When a person refinances a loan, an appraisal is needed.
James Noel Jr., who owns an appraisal business with his wife, Donna, said his work has picked up over the past two weeks.

Last month, only 20 percent of his business was for appraisals due to refinancing. This month, based on early projections, 80 percent of his business is refinancing.

“It has been crazy,” said Noel. “It started getting crazy when the interest rate began getting low, around Christmas.”

Noel said he has no complaints about the recent increase in business. “Everyone takes advantage of the low interest, which is good for me.”

Troy LaPorte, of LaPorte Appraisal Service, said his business has doubled over the last three weeks. He predicts the refinancing will come in two waves. When interest rates first fall, certain people rush to refinance while others wait to see if the interest rate will go even lower. He said when the interest rate spikes slightly, another wave of people will head to the bank in fear that interest rates are going back up.

He added that a lot of his business are people who refinanced their home loans two or three years ago.