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Kimberly Houk ReportingNearly a third of all Utahns took advantage of low interest rates and refinanced their homes in the past year. A KSL-TV and Deseret Morning News poll shows the main motivation was lower monthly payments.
Now rates are going up and while that may slow the refinancing boom, one economist says that could be good for the economy.
Mortgage loan rates are lower than they've been in 50 years. Interest rates for 30-year home loans are closing in at 6 percent nationwide, jumping from 4.3 percent just a few weeks ago. One local economist says the increase is reflecting an economy that's growing stronger.
Leslie Peterson, Utah Mortgage Lender's Assoc.: “I’ve been in the business for 30 years and I’ve never seen interest rates this low. I’ve never seen anything happen like it’s happening today.”
According to an exclusive KSL-Deseret Morning News poll, by Dan Jones and Associates 29 percent of Utahns have refinanced in the past twelve months.
Out of those who did, 89 percent did it to cash in on the low interest rates. When asked whether they wanted to lower their monthly payment or shorten the life of their loan 49 percent said to reduce their monthly payment and 29 percent refinanced to shorten the life of the loan while 19 percent wanted both.
But now the rates are rising and mortgage brokers are worried.
Peterson: “I think it will affect the housing market because people won't qualify anymore."
Peterson says lower rates mean more people qualify to refinance and buy homes, and she says higher rates will change that. But Economist Kelly Matthews says the rate increase indicates the American economy is getting stronger.
Kelly Matthews, Economist: “The consumer sector has benefited from the low rates and the mortgage refinancing and the cash out. But that is not a scenario for long-term prosperity.”
Matthews says job growth comes when corporations borrow money and invest, causing interest rates to rise.
Matthews: “You have to remember that consumer spending is driven by jobs and employment opportunity, and right now this economy is not creating any new jobs."