Record-low interest rates are propping up refinance volume at Three Village mortgage companies, but experts say home sales are still being dragged down by the economic slump.
Rates are currently hovering near their lowest level in decades and sat at 4.47 percent last week, the second-lowest rate on record, according to the Mortgage Bankers Association.
The drop has boosted refinance volume because homeowners can save hundreds on monthly payments by lowering their rate with a new loan, especially if they bought a house during the boom years when rates were as high as 7 percent.
"Refinances definitely ticked up toward the end of August," said Christine Intrabartola, mortgage adviser at Coldwell Banker in East Setauket.
Scott Sanders, owner of Branch Mortgage Consultants, also in East Setauket, said refinance volume has inched up at his firm as well, but the increase hasn't been as large as he'd expect when rates are lower than they've been in decades.
"There's not as much business as we would have liked," he said. "A lot of people who want to refinance can't, and those who could, did it already."
Interest rates dipped below 5 percent earlier this year, though they didn't drop as low as they are now, and Sanders said many local residents took that opportunity to lock in lower rates.
Others don't have enough equity left in their homes for a refinance. Lenders will no longer mortgage 100 percent of a home's value, and residents that currently have a loan equal to or greater than their house's worth, which has most likely sunk since the beginning of the recession, won't qualify for a new loan.
Though refinances have increased, experts said home sales haven't gotten a jolt from record-low rates. They're still lagging after the expiration of the first-time homebuyer tax credit this spring.
"Once the tax credit ended, we definitely saw a fall off in home sales," Intrabartola said. "You'd think there'd be more now with these historic lows."
Janet Smiley, manager of Coldwell Banker, said though the low rates haven't upped home sales, they have brought investors back out to look at Three Village properties.
"Prices on houses are low and low rates are giving customers more buying power," she said.
Those that want to take advantage of low rates and make a home purchase will have to qualify for more-stringent mortgage guidelines, Smiley said, adding those rules are knocking many homebuyers out of the game.
"People that might have gotten a loan three years ago can't get that loan today," Smiley said.
But though local mortgage companies aren't getting as much business as they'd like from ultra-low rates, Sanders said rates are keeping business going.
"Things aren't moving all that well right now, and the low rates are certainly keeping us moving," he said.