Rate picture brightens

      Bank of America mortgage lenders in Las Vegas weren't immediately available for a quick comment about mortgage refinancing earlier this week.
      "Our lenders right now are inundated with 'refi's' and new home sales" financings, explained Paul Stowell, bank vice president. "We have seen a dramatic increase in refinancing, and we expect that to continue based on lower rates."
      Other lenders also are being flooded with home mortgage refinancing applications as customers rush replace old, high-rate mortgages and to lock in the lowest mortgage rates since 1993.
      Nevada Federal Credit Union has seen a 30 to 40 percent growth in volume over the first half of 1997, said Gary Wilson, vice president of mortgage lending at Nevada Federal Credit Union.
      Homeowners are excited about the prospect of saving a hundred or more dollars each month on one of their biggest monthly bills -- the mortgage bill.
      "Generally, most of the (financial) institutions people build the cost of refinancing" into the new low, Wilson said.
      So the homeowner faces no immediate out-of-pocket expense for refinancing.
      Some homeowners convert from a 30-year, fixed-rate loan to a 15-rate loan, Wilson said.
      "With the reduced interest rates, their payments are about the same," Wilson said. But the homeowner benefits by paying off the home loan early.
      "We see a few (homeowners) pulling equity out," Wilson said. Others figure they can use second mortgages in the form of home equity loans if they want access to the equity.
      "We do very few adjustable rate mortgages right now," Wilson added. Adjustable rate mortgages are generally tied to short-term interest rates, he explained. "Short-term interest rates are almost as high as long term right now."
      At Nevada Federal, 30-year, fixed-rates have have fallen 0.875 of a percentage point since July 1 to 7 percent now for standard mortgage loans.
      Lower mortgage rates are heating up the resale market for homes in Las Vegas, said Jim Whitworth, corporate president and broker at Century 21 Realty Associates.
      Many are converting their homes into rental properties and buying another home, Whitworth said.
      These individuals often are impressed by national stories about Nevada's explosive growth, and they think: "I'm going to get my piece of the action."
      Dennis Smith, publisher of Homebuilders Research, conceded lower interest rates are good for new home sales. But higher housing costs offset the decline in rates, he said.
      "Sales have been very steady -- similar to what they were," Smith said. New home prices rose 2.5 percent in 1997 and 3 percent in 1996. publisher of Homebuilders Research.
      Low interest rates benefits business in general, and businesses are also seizing the opportunity to refinance long-term loans, said Bill Martin, chief executive officer of Pioneer Citizens Bank.
      Lower rates in particular benefit casino operators who are borrowing hundreds of millions for new projects.
      Some borrowers will wait for interest rates to get lower, but interest rates are hard to predict.
      Ten years ago, if you had told someone long-term mortgage rates would decline to 7 percent, "they probably would have told you that you were crazy," Smith said. "Seven percent interest is probably as low as it's ever going to get."