By Al Heavens<br />Inquirer Columnist<br />Brace yourself, my friends. A mortgage-refinancing boom could be around the corner. That’s the opinion of an increasing number of lenders, at least.<br />”Stock market problems, talk of recession, and the ‘flight to quality’ ” – investors dumping money into safe, though lower-yielding, Treasury bonds – “all point that way,” said Fred Glick, president of USLoans L.L.C. in Philadelphia.<br /><br />The long-term, 30-year fixed-rate roller-coaster is headed downward, observers say. <br /><br />”Interest rates have been falling substantially since late January, making refinancing more desirable,” said Bob Walters, chief economist for Quicken Loans.<br /><br />Long-term rates have been hovering at 6.15 percent for more than a month and aren’t expected to venture too far from that spot.<br /><br />”We do not foresee significant movements in mortgage rates, with rates on 30-year fixed-rate mortgages averaging between 6.3 and 6.4 percent for the remainder of the year,” said Freddie Mac chief economist Frank Nothaft.<br /><br />Who will want to refinance?<br /><br />”The rush of folks who are facing ARM adjustments and, therefore, moving to the safety of a fixed rate is significant,” said Walters.<br /><br />About $1.1 trillion in adjustable-rate mortgages are scheduled to refinance in 2007 alone, according to the Mortgage Bankers Association of America.<br /><br />But will it be a boom akin to the one in fall 1993, when long-term rates fell below 7 percent for the first time since 1980, or the one in 2001, when equally low rates led re-fis to comprise three-quarters of all mortgage originations? <br /><br />”Re-fi boom?” asked Walters. “Tough to say. A ‘boomlet’ is under way right now.”<br /><br />Said Jim Svinth, chief economist at LendingTree.com: “For folks with reasonably good credit and equity in their home, this is as good a time as any to shift from an adjustable product to a fixed-rate product.<br /><br />”I believe some of the unsettling news lately in the financial markets inspired consumers to think about their own financial situation, and many made a move last week, as reflected in the refinance statistics,” Svinth said.<br /><br />He was referring to the week ending March 2, when the refinance share of mortgage activity increased to 46.1 percent of total applications from 43.2 percent the previous week, according to the Mortgage Bankers Association.<br /><br />That’s not three-quarters of all originations, but, yes, it probably could be defined as a “boomlet.”<br /><br />In 1993, with lots of borrowers running to refinance, the mortgage system almost ground to a halt. That didn’t happen in 2001, because by then the process had been computerized enough to keep things moving rapidly.<br /><br />I’ve refinanced only twice – once in 1994 and again in 2003 (different mortgages and houses).<br /><br />The second time was to convert a 6.25 percent hybrid (I think it was a 5/1) to a 5.375 percent fixed. I was on the phone to my broker just about every two days in the six months between the ARM and the fixed-rate mortgage, asking if it was time yet. (Now, if I could only negotiate a lower property-tax rate with the borough.) <br /><br />From the National Association of Mortgage Brokers comes this caveat: Be aware of all the fees and closing costs you will incur – refinancing is not free. Ask for a written list of the costs. <br /><br />Who should refinance? Walters recommends it for:<br /><br />Anyone who has a fixed rate and can lower it. If you can do a “no cost” refinance, then simply dropping your rate by one-eighth of a percentage point makes sense. <br /><br />Anyone facing an ARM adjustment in the next 18 months. <br /><br />Anyone who has improved his or her credit profile, to take advantage of the lower rate that can be achieved in a better credit program.<br /><br />Anyone whose home has increased in value and who has mortgage insurance should refinance to remove that insurance.<br /><br />Anyone who has significant amounts of other, expensive debt, to lower their total borrower costs – for example, credit- card debt carrying interest rates in the high teens to low 20s.<br /><br />If you don’t have to wait to refinance, don’t. And be sure to shop for the best deal.