Mortgage rates have crept down to near their low points for the year in recent weeks, leaving potential home buyers and refinancers to ponder those age-old real estate questions: Will rates go any lower, and just how low will they go?

The answer, according to market watcher Keith Gumbinger, is that things won't get any better than this. Rates are about as low as they'll be, he says. So if you are waiting for just the right moment to buy or refinance, now's the time.

"It is our opinion that without more significantly dire economic news or a major slowdown in housing demand, mortgage rates are either at or very close to their bottoms -- within perhaps a quarter-percent, at most," says Gumbinger, vice president of HSH Associates, a Butler, N.J., financial publisher which surveys some 2,000 mortgage lenders nationwide every week. HSH is not a lender and does not make loans.

"We can't stress enough that borrowers should take advantage of the current rate situation and shouldn't wait for significantly lower rates. We should be nearing the end of the summer doldrums in the next few weeks, and the return to more business-oriented focus may disturb the rate pattern, for better or worse."

If you need another reason to act soon, perhaps the latest survey of bank lending practices by the Federal Reserve Board will put you into gear. In what may be a harbinger of things to come for the mortgage market, the study found that many lenders have begun tightening the standards and terms for commercial loans and some consumer loans.

Credit standards for approving residential mortgage loans were largely unchanged over the past three months. But the survey of loan officers from 57 large domestic banks and 20 U.S. branches of foreign-owned institutions found some lenders already have made it more difficult to obtain credit cards and arrange other consumer loans.

In keeping with what Gumbinger calls the resiliency of the mortgage market in the face of less-than-scintillating economic news, senior loan officers also reported that demand for residential mortgages actually increased over the past three months.

Perhaps that's why noted mortgage industry stock analyst Jonathan Gray of Sanford C. Bernstein & Co., has revised his forecast for residential lending volume to $1.74 trillion for this year. If he's right, that would pass the previous record set in 1998.

Gray had been forecasting lending volume to total $1.52 trillion this year, which is well within the consensus forecast of $1.5 trillion to $1.6 trillion.

The Mortgage Bankers Association already has seen an up-tick in recent weeks in the number of loan applications, nearly half of which are now coming from current owners wishing to trade in their older, more expensive loans for newer, cheaper ones.

For more articles by Lew Sichelman, please press here.

Published: August 27, 2001

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.