LOW RATES FAN HIGH INTEREST IN HOME LOANS

With mortgage rates dipping to digits that haven't been seen in the housing market for two decades, many home buyers and home owners looking to refinance are reaping the benefits.

"People that could not have afforded their own home five years ago may find that they can very much afford a home today," said Martha Hamilton of Century 21 Key Realty. "The cost of a home mortgage is real close to what a home mortgage would have cost in the mid 70s."

Current local rates range from a low of approximately 4.25 for a one-year adjustable to between 6.625 and 7.375 for a 15-year fixed, to between 7.125 and 7.75 for a 30-year-fixed-rate mortgage.

While there have been slight fluctuations, those rates are comparable to rates of one year ago, according to David Shell, vice president of real estate lending at Boatmen's Bank. A significant rate drop occurred between February 1992 and February 1993. "In December of 1992, a 30-year-fixed-rate was in the 8 percent range," Shell said.

But even the 8 percent mortgage rate was practically unheard of just a few years ago.

From the late 70s through the next several years, mortgage rates climbed into double digits.

"They ran real consistently in the 14 to 16 percent range," recalled Art Blaylock of Coldwell Banker Blanchard and Associates Inc. "There were some very isolated cases where rates got into the 20s."

By about 1992, rates had dropped significantly. Reasons for the drop have been linked with bond market activity, decreases in inflation and action by the Federal Reserve.

It's those kinds of rates that have prompted would-be home owners, persons looking to sell their current homes and move up, and yet other home owners hoping to refinance, scurrying to local lending institutions.

"We handled quite a bit of refinancing last year, more than in previous years," noted Suzy Glasscock, loan officer of Farm & Home Savings Association. The low rates have been "just amazing," she said.

Government-insured loans are another option would-be home owners with more limited down payments can pursue. Interest rates on VA loans and FHA loans are "right at the 7 percent range," Glasscock said. "The 15-year loans are in the 6.5 percent range."

"Once interest rates started dropping, we saw an increase in demand for housing followed by an increase in resale price," noted Hamilton of Key Realty.

She said the average sale price of homes in Cape Girardeau in 1993 was $71,726 compared to $68,473 in 1992. The average sale price of homes in Jackson in 1993 was $78,591 compared to $67,946 in 1992.

Just as mortgage rates are subject to change daily, how long rates will remain at current levels is subject to opinion. Some financial experts and real estate professionals point to signs that rates may start increasing incrementally, while others say trends indicate they will stay relatively flat in the forseeable future.

"It depends on the market," Blaylock said. While rates have been lower in the distant past, he noted, "I don't see that as something that's likely to happen now."