Lenders Backlogged By Refinancing Rush

The short answer: Not all lenders are trying to lure customers, said Keith Gumbinger, a vice president at research firm HSH Associates.

"You don't want to turn borrowers away," Gumbinger said. "But if you do, that's okay because you're ostensibly having trouble serving the customers you already have."

Guy Cecala, publisher of Inside Mortgage Finance, said some lenders also do not want to post the best rates because they don't want to be bound by them.

"There are so many variables that go into a rate, such as credit score and equity," he said.

The record-breaking low rates that grab most headlines apply to 30-year, fixed-rate mortgages under $417,000 that meet the guidelines of mortgage financiers Fannie Mae and Freddie Mac. Investors perceive these loans as safe because they have the government's guarantee. The average rate on those loans was 5.13 percent yesterday, according to HSH.

Far higher rates apply to loans larger than $625,500 in a few pricey markets, including the Washington area. Investors stopped buying those jumbo loans when the mortgage market soured and their rates shot up. The average jumbo rate hit 6.81 percent yesterday.

In the same expensive markets, an in-between rate can be found for loans from $417,000 to $625,500. That middle tier was created last year when the federal government tried to help pull down jumbo rates by allowing Fannie Mae and Freddie Mac to buy larger loans, hence making them more attractive to investors. The rate on these loans averaged 5.5 as of last week.

There have, of course, been points during the week when rates at some lenders have been higher or lower.

A common pitfall for many borrowers is that they chase after the lowest rate without regard to transaction fees such as closing costs or points, the upfront fees borrowers pay to reduce the rate on a loan, said Henry Savage, president of PMC Mortgage in Alexandria.

"Getting 4.5 percent with $6,000 in fees might not be better than getting 5.25 percent with no fees at all," he said.

But for those who do reach a lender and strike a deal, the rewards can be sweet.

Brooke and Alex Heiberger of Rockville refinanced from an adjustable-rate mortgage into a fixed-rate loan with the help of Devon Segal, a broker at Apex Home Loans. They were thrilled to be quoted 5.375 percent, their previous rate. But they were downright ecstatic when Segal told them that rates had dropped more. This week, they closed at 4.875 percent.

"You always wonder if you could have gotten a better deal," Heiberger said. "But that rate drop took away any buyer's remorse. We feel like the luckiest people in the world."