Posted on: Friday, March 19, 2004
Mortgage rates dropping again
| • | Current mortgage rates |
By Deborah Adamson
Advertiser Staff Writer
If you kicked yourself for not refinancing when Hawai'i mortgage rates hit a nearly half-century low last summer, take heart: Rock-bottom rates are back.
Last week, the average one-year adjustable rate mortgage in the state hit a new low of 2.86 percent.
Fixed rates for 15- and 30-year mortgages have fallen in recent months to just above the lowest levels in over four decades. The 15-year is 4.26 percent and the 30-year is 4.93 percent.
That's welcome news to Craig Watase, an affordable housing developer with offices in Kaimuki who's looking to cut mortgage costs as other business expenses rise.
"Our bankers are looking at refinancing our properties. They're trying to do the calculations now," said Watase, who recently refinanced his own Niu Valley home twice.
Nationally, the average 30-year rate dipped to 5.38 percent, the 15-year to 4.69 percent and one-year ARMs to 3.39 percent, according to Freddie Mac, a corporation chartered by Congress to help keep the mortgage lending market liquid.
Hawai'i's mortgage rates reflect the national rates, since the home lending market is affected by global capital. Any differences generally are reflected in the annual percentage rate, which figures in various lenders' points and fees.
Many factors affect interest rates, but key is an expectation of inflation. A stronger economy might bring higher inflation, which brings rates up.
Last week, the Federal Reserve decided to leave the target for short-term interest rates unchanged at 1 percent — a 45-year low. This decision suggests the nation's central bank doesn't anticipate high inflation.
Moreover, lower-than-expected U.S. job growth from December to February signaled that the economy may not be as strong as it seems, said Paul Brewbaker, of the Bank of Hawaii.
He added that geopolitical factors such as the bombing in Spain also have affected the handling of global capital — investors worldwide are going for what looks safe.
Investors have been buying Treasurys, propelling prices higher and yields lower. Mortgage rates are benchmarked to the 10-year Treasury note, whose yield now stands lower than at the end of December, Brewbaker said.
In the past 30 days, loan application volume has doubled at the Bank of Hawaii, said John Gray, Bankoh's executive vice president and division manager of mortgage banking. Sixty percent are refinancings and the rest are for home purchases.
First Hawaiian Bank is seeing an 8 to 10 percent bump in new home equity lines compared to a year ago, said Mark Felmet, executive vice president of the consumer lending group.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
