Chicago Tribune Mary Umberger column: If you can buy/refinance now, do it

Oct 05, 2008 (Chicago Tribune - McClatchy-Tribune Information Services via COMTEX) -- WB | Quote | Chart | News | PowerRating -- There was one brief, shining moment in the Wall Street tumult last week that had a few observers quietly hoping that mortgage interest rates might drop.

The reasoning: Investors were pouring out of stocks and into bonds. Plus, resolving (to an extent) the messes of Washington Mutual and Wachovia Corp. might bring the market a step closer to pegging the true value of a home loan on Wall Street.

Like I said, it was brief.

By midweek, with the proposed bailout still in question in Congress, the cash-flow situation was seesawing and I had a hard time getting anybody to even venture a guess where rates were going.

"Tricky question," said Rich Bira, president of First Capital Mortgage in Chicago. "I guess I'm saying that they're going to go up, on the sole premise that in the next few weeks to a month, the stock market will hit bottom and the stock market will get its footing."

And that, Bira said, will push money back into stocks and away from bonds, which is where mortgage rates are born. "In the coming months, rates will start to creep up a little," he said.

Nonetheless, a weekly poll of industry analysts from Bankrate.com, released Thursday, leans strongly toward rates going down. Two-thirds of its panelists this week said rates will fall in the next 35 to 45 days.

Regardless of the rate direction, broker Dan Green said that obtaining a mortgage is getting more complicated. New requirements lengthen the process, and new fees tied to the borrower's creditworthiness can tack on costs, he said.

"What I generally tell clients is that we don't know if [rates] will be up or down, but one thing is pretty certain: It will be more difficult to get a home loan," said Green, mortgage planner at Mobium Mortgage in Chicago. "If you're thinking about now rather than later to buy or refinance, now is better because we at least have the certainty of knowing who the market will approve."

Or at least we did on the day he said it.

The next wave

When the housing morass finally clears and people start buying homes again (and they will, I promise), look for minorities and young adults to be first in line.

That's the conclusion of a Chicago market-research firm that thinks Echo Boomers (currently under 30 years old), Hispanics, Asians and African-Americans will be the ones to pump life back into the first-time buyer market ... eventually.

Mintel International Group Ltd. says that as home prices fall, the aforementioned groups--who largely missed the boat during the boom because ballooning prices put real estate out of reach--will want to snap them up, especially if they have no existing home to sell first.

The researchers said that not only are those groups growing in sheer numbers, they're eager to buy. Though just 23 percent of the general population plans to buy a home in the next five years, the numbers are far stronger among young adults and minorities.

That's not to say the researchers are unaware of how the economy and current tight lending standards might sink even the most earnest dream.

"We phrased the question, did they plan to buy in the next five years, but it might be more accurate to say they hoped to be buying," said Susan Menke, a senior financial-services analyst with Mintel.

Her company will distribute the results of the study within the banking industry, urging it to develop programs to teach these potential clients about the home-buying process and the ins and outs of credit now, rather than later.

"We're telling them, if you're going to focus on any of the demographic groups [as future borrowers], these are the ones to focus on," she said.

Another kind of bailout

Within the endless stream of falling Wall Street dominoes lurk some pricey executive digs--or is that a redundancy? One of the more stunning examples of mansionesque real estate of fallen titans that's now on the market is the weekend home of Joseph Gregory, the former chief operating officer of Lehman Bros.

Within the 8,000 square feet of the shingled, oceanfront manse in the enclave of Bridgehampton, N.Y., are eight bedrooms, a conservatory, and a "salon" for entertaining. In case you're interested, the weekend getaway (which local news reports said had been used on only 14 days in the past two years) is listed for a mere $32.5 million.

Hear Mary Umberger at 12:49 and 11:15 p.m. Tuesday and Thursday and at 10:30 a.m. Saturday and Sunday on WGN-AM 720. Write to her at House & Homes, Chicago Tribune, 435 N. Michigan Ave., Chicago, IL 60611 or send e-mail to housingnews@comcast.net

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