Issue date: February 24, 1999

Four views of mortgage market Four views of mortgage market (February 24, 1999)

There's little difference of opinion about the future of mortgage interest rates among four local bankers who were interviewed by The Almanac last week.

Three see no big change in rates, which have been hovering around 7 percent for months.

One banker, however, thinks rates are feeling upward pressure and could rise a quarter to a half percent by year end.

Here are their views:

Nina Barycza, president, Adamarc Financial Co. Inc., Menlo Park: Our average loan amount is over $375,000. Most lenders offer loans right around 7 percent. Rates are below 7 percent on loans below $240,000 and between 7 and 7.5 percent on loans up to $1.5 million. We think rates are going to be very stable, with a fluctuation of no more than a quarter percent this year. We are taking into account what is happening on the stock market, our political situation, unemployment and the supply of money available for lending.

Mary Kasaris, regional manager, First Republic Bank, Menlo Park: Our opinion is that rates in the near term will remain stable. Our crystal ball goes out only four to six months. The Fed didn't raise rates in the last round and we don't have any sense they will. Upward pressures are felt more by mortgage companies than by commercial banks because they don't have our flexibility.

Joseph Lanam, vice president, residential mortgages, Comerica Bank, Palo Alto: Interest rates are going up slightly. Short-term mortgage programs -- three years and five years -- are going up about a quarter percent. Long-term programs like 30-year jumbos seem to be more stable at 7.25 percent with no points. There's a lot of pressures to go up right now caused by uncertainty with stock and bond markets. When there's that kind of uncertainty, people are more cautious. You have lenders who have rates a little bit higher than they would like to because of the uncertainty. For the year, I think rates are going up a quarter to a half percent, but they'll stay in the 7s somewhere. The demand is still high for homes in the $400,000 to $750,000 range.

Mark Leaver, mortgage broker, Fair Oaks Financial Services, Palo Alto: Interest rates right now are hovering near 7 percent for a 30-year fixed mortgage. I don't see any real surprises on the upside or the downside. Rates are purely a function of inflation and it has been very tame. A slowdown in the economy would cause rates to drop, but we haven't seen any indication of that. The economy continues to pleasantly surprise us. Demand for mortgages in the area has slowed down because of rate stability. Until something indicates that rates are going up or down, demand will remain relatively flat. There aren't a lot of houses on the market. There is a limited amount of building. The lead time for processing a loan today is down to two to three days compared to two or three weeks last year. There's no shortage of money to lend, there's a shortage of buyers.