Mortgage rates stay near historic lows

Southwest Missouri mortgage lenders expect that interest rates will probably hold steady for the rest of the year.

“Inflation numbers came out and they were saying that inflation was in check,” said Lois Kreider, vice president and chief operating officer at Mid-Missouri Mortgage Co.

“Typically rates would go up when that happens, but the economy is still not backing those numbers as strongly as (investors) anticipated. I think the rates we’ve seen in the last few weeks and months is where the market is going to be the rest of this year,” she added.

The reason, according to loan officers and investors, is those other economic indicators: unemployment rates and job levels.

In fact, according to Steve Inmon of First Horizon Home Loan Corp., it will probably take something drastic to drop interest rates below their current levels.

“I think, unless we have another disaster like Sept. 11 or something with the environment or along those lines where we’re forced to drop rates, with the signs of growth and the flattening of interest rates, most economists and investors are saying (rates) are going to go up,” Inmon said. “We’ve seen the heyday.”

Even if that heyday has come and gone, rates are still at all-time low levels; a 30-year fixed rate mortgage is currently around 5.5 percent.

James Holstein, chairman at Old Missouri National Bank, said volume is still high, and he anticipates that it will stay that way.

“I’m a little surprised that rates didn’t stay where they were three months ago, when they were just over 6 percent, because that’s still a fantastic rate and it would be more in line with how (the prime rate) is going up,” Holstein said.

“I think mortgage rates are artificially low, and even if they were to go up 100 basis points, that would still be a great rate, and I don’t think it would slow down the new home market,” he added.

The prime rate, though, does not run parallel with mortgage rates, as Old Missouri President Mark Harrington noted.

“All long-term rates are a product of people’s expectations for inflation,” he said, “and if they think that inflation is under control, they’re not afraid to lock up money for a longer period of time.”

The majority of the current mortgage market is new financing; Holstein said the market for refinancing has been mostly tapped out.

“I would think that the refinancings have been pretty well soaked up; with those rates having been so low, if they haven’t already refinanced once or twice in the last few years, I’d be amazed if there are too many out there left to do that unless they’re really slow to pull the trigger,” Holstein said.

While none of the lenders were able to predict with certainty what would happen, most agreed that mortgage rates would hold relatively steady over the rest of 2005, despite low inflation numbers that usually trigger rising interest rates.

Inmon said this region tends to weather financial tough times better than some other areas, especially in housing.

“I think the housing market in Springfield and the surrounding areas is – I don’t want to say recession-proof – but it’s continual,” he said. “With all the building permits that are issued each day, it’s incredible. We’re lucky to have this much land to build on, and business is going pretty strong.”

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