Posted on: Tuesday, June 10, 2003

Talk about competitive mortgage rates in Hawai'i

By Deborah Adamson
Advertiser Staff Writer

People who brag about owning beachfront homes and luxury SUVs are now boasting about snagging a low mortgage interest rate, lower than the next guy's.

"It's like keeping up with the Joneses," said Arnawood Iskenderian, a Maui-based real estate investor and broker who's refinancing his home. "It's cocktail party one-upmanship."

Catching low interest rates has become something of a competitive sport to some Hawai'i homeowners. Forget that in some circles it's impolite to talk about money.

Financial climbers aren't shy about telling their friends or relatives about their coup, industry experts said, and basking in the wave of envy that inevitably follows.

With the stock market showing signs of life, real estate has been the hot investment topic du jour since 2000. It's not surprising, given that mortgage rates nationwide have fallen to their lowest levels in more than 40 years.

In Hawai'i, the 30-year fixed annual percentage rate fell last week to an average 5 percent and the 15-year fixed rate edged up to 4.6 percent, according to a survey of lenders by the Honolulu Board of Realtors.

The rates are so attractive that it's no longer unusual for homeowners to refinance two, three or more times as rates drop lower.

So long as the numbers work to a homeowner's advantage, it's a good strategy, financial advisers say.

But for some, this is less about finances than letting your friends eat your dust.

No question, "there's a lot of envy out there," said Peter Heinen, a loan officer at HomeStreet Bank.

Just ask Tulsi Ram, a La'ie accountant who's into his second refinancing in a year. He got a straight no-point, no-fee loan from Heinen at 5 percent for a 15-year fixed.

When he mentioned the deal to his co-workers, their reaction was, "Wow, how did you get it that low?" he recalled.

Four of his colleagues now are refinancing with Heinen, Ram said. Ram could refinance again if rates drop more.

"People are fearful they are not getting the best deal," Heinen said. "People ask, 'Is the rate getting lower? Should I lock in now?' I told them if I knew that I'd be rich."

Sometimes, good friends try to outdo each other in friendly sportsmanship in a refinance, said Pom Luxton, manager for the downtown loan center of Bank of Hawaii, the state's largest mortgage lender.

She said that an executive client recently decided to refinance to save half a percentage point on his mortgage loan. But not only was he interested in getting the best deal, he wanted to beat a friend of his, an executive at Bank of Hawaii.

"The gentleman asked if our bank executive had redone his loan," said Luxton, who replied in the negative. "He said, 'So I've got a lower rate than he does.' "

Why does getting a lower rate than your neighbor matter?

Bagging a great rate could make you a genius in people's eyes. It's akin to cashing out of stocks before the market tanked. Even if it's accidental, people look at you in awe.

"You'll look like a really smart guy," Luxton said.