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Home loan rates continue to fall, applications soar

Mortgage rates are falling, housing values are recovering and refinancing applications are soaring.

For much of last year, economists forecast rising interest rates. But the latest numbers reported Thursday show a steady decline, which likely will encourage more homeowners to lock in lower interest rates.

Mortgage rates dipped for the third straight week, entering territory unseen since May 2013, according to the Freddie Mac Primary Mortgage Market Survey.

A 30-year, fixed-rate mortgage averaged 3.66 percent for the week ending Thursday, down from 3.73 percent last week and 4.4 percent in January 2014.

Meanwhile, the Mortgage Bankers Association reported mortgage applications leaped 49 percent for the week ending Jan. 9 over the week earlier. Not since November 2008 had applications increased week over week. Two-thirds of the new applications were refinances, the highest level since September 2013.

"People feel like they have equity now and that is a huge factor," said Guy Giles, sales manager at Summit Funding. "They're feeling better about the value of their property. The other piece of it is rates. The economic news is not very strong, we keep getting bad economic data. But at the end of the day, we're better off than Europe. Even if investors are only getting 2 percent on (U.S.) treasuries, or 1.9 percent, while they are getting only half a percent in Europe. So it looks pretty good."

Word is filtering out at the consumer level as well.

Rogue Credit Union saw a dramatic increase in mortgage loan applications during the first 15 days of January, CEO Gene Pelham said.

Between Jan. 1 and Jan. 14, 2014, Rogue received 29 mortgage loan applications. As of Thursday, RCU had 45 applications, a 55 percent increase over last year. The Medford-based institution also reported a 36 percent gain over the final two weeks of December, when it had 33 applications.

The momentum was evident to John Mafrici of Park Place Mortgage last month.

"I saw strong activity at the end of the year," Mafrici said. "We know that if someone is out looking during the holidays, they are really serious about buying a house."

Mafrici said rates in the high 3 percent range could spark new construction this year. A client who purchased a lot a year ago is due to close on a construction loan today.

"Maybe people are sitting up and noticing something is going on with the economy," he said.

Mike Towery, who oversees the iMortgage office in Medford, said consumers are pleasantly surprised after hearing the steady mantra of pending interest rate hikes.

"I think there are people every month now finding they have enough equity to refinance," he said. "Maybe they have a loan rate of 5 or 6 percent, or higher, and now there are (sales) comps to support a refinance. Those people probably stand to gain the most."

Adjustable-rate mortgages are trending down as well. The five-year, Treasury-indexed hybrid adjustable-rate mortgage hit 2.90 percent this week, compared with 2.98 percent a week ago and 3.10 percent a year ago. The one-year Treasury-indexed adjustable-rate mortgage, which averaged 2.56 percent in 2014, hit 2.37 percent this week, down from 2.39 percent a week ago.

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/Economic Edge.