Some Chicago area mortgage lenders are reported a big jump in prospective applicants Wednesday and this could be an indication that the credit crunch maybe easing a bit.
If you're in the market to refinance, now may be the time. It's hoped that the lower mortgage rates will entice homeowners to take action. So far, it seems to be working.
Some customers at Hinsdale Bank made a special trip after seeing mortgage rates drop.
"This is a pretty good deal so we at thought we would come down and check it out. We knew it would impact us favorably but we didn't know how much or whether it would be worth it or not," said Carol Calcaterra, bank customer.
With their daughter's college tuition and a dip in the retirement, they wanted to see if the lower rate could work for them.
"Anything to increase our cash flow," said Charlie Calcaterra, bank customer.
At Hinsdale Bank, 10 to 15 percent of their business is mortgages. On Tuesday, there was lots of interest from those who wanted to finance.
Bank CEO Dennis Jones says those with good credit can benefit if they want to refinance now.
"Rates are wonderful when they are in the fives. Don't wait, you will miss the low," said Jones.
On Tuesday, the U.S. Treasury and Federal Reserved announced a new approach to stabilize the housing market -- bringing mortgage rates down to as low as five-and-a-half percent, triggering the most mortgage volume in months.
"It allows us at least at some level to borrow money less expensively in the markets, which allows us to pass on that benefit to our member banks," said Matt Feldman, president of Fed Home Loan Bank of Chicago, which offers financing to over 800 member banks.
Feldman says they saw the volume of mortgages from Monday to Tuesday increase fivefold. He believes the treasury's moves will help get the housing market moving for now.
"It will help credit worthy borrowers obtain mortgages at a more reasonable price. It will not help people who have challenged credits and that is where, I believe, a great deal of assistance needs to be placed," said Feldman.
Feldman hopes the plan to help struggling homeowners renegotiate mortgages will help deal with the many homeowners who simply won't qualify under the stricter credit requirements.