The Latest Rate Dip Spurs a Refinance Rush

The drop in mortgage rates below 4 percent has cut into Debra Shultz’s sleep. The New York mortgage banker is busier than she’s been in months, working with three dozen homeowners eager to lower their payments. Shultz helped a homeowner in the Greenwich Village neighborhood of New York on Oct. 15 lock in a 3.63 percent interest rate for a 30-year fixed jumbo mortgage of more than $900,000. An hour later, the rate jumped to 3.75 percent. One lender Shultz deals with changed its rates six times that day. “It just went crazy,” says Shultz, a senior vice president for mortgage lending at Guaranteed Rate in New York. “I sent out a blast e-mail to 1,600 clients and had 30 responses right away.”

Mortgage rates are following a slide in 10-year Treasury yields, with investors seeking safe investments amid news of weaker-than-expected economic data from Europe and China as well as worries about the economic effects of the Ebola virus. The average rate for a 30-year fixed mortgage dropped to 3.97 percent, the lowest since June 2013, Freddie Mac said on Oct. 16. Borrowing costs spiked in September, then dropped in the following weeks, giving homeowners an opportunity to lower their payments. “This is bizarro world,” says Anthony Sanders, an economics professor at George Mason University. “Usually we associate lower interest rates with lower volatility. Now you’re seeing the opposite.”