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Low mortgage interest rates could head upward in late 2013

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Increasing interest rates, more people refinancing homes into 15-20 year mortgages and more first-time home buyers – that's what some officials in the home-buying field are predicting for 2013.

Joey Starcher, mortgage banker at Victorian Finance, said interest rates are at all-time lows and that has driven many people to refinance their homes. It also has spurred more purchase transactions, he added.  

"Interest rates bottomed out but could be on a bit of an increase. They will probably stay steady for the first half of 2013 with an expected increase in the second half of the year," Starcher said, noting he has seen the interest rate as low as 3.25 percent increasing to the current rate of 3.5 percent. Starcher said people could see interest creeping up to 4 percent by the end of this year.

Starcher said refinance activity also has been on the increase in the last two to three years.

"Many people who have 30-year mortgages have taken 15-20 year mortgages because rates have been so low. In some cases they have kept the payment the same as their 30-year," he said.

For the next year, Starcher also predicts more first-time buyers using government-based loans. In these loans, Starcher explains, qualifying criteria aren't as strict.

"There are still some loans out there with no down payments available for certain borrowers," Starcher said.

Starcher said in the Charleston area, the rate has remained steady for new home purchases. He added that there wasn't much job loss concentrated in Kanawha County during the housing bubble, however.

"There were pockets in the state like the Eastern Panhandle, which was really hit hard by job loss and the downturn in economy, but the market in the Charleston area, especially for 2012, is really good."

So will more people flock to Kanawha County to buy homes?

"There's always going to be some demand for housing," Starcher said. "Will it ever be like it was five to six years ago where anyone having a Social Security number and a pulse can buy a home? No. But there will always be a need for housing in this area."

Kristy Zaferatos, realtor office manager at Zaferatos Real Estate in Beckley, said the housing market is picking up in the Raleigh County and Fayette County area. 

But Zaferatos said larger purchases have not been as big.

"A lot of houses are showing for under $180,000," Zaferatos said. "Nothing is really over that. … The bigger homes aren't really moving. I don't know if people are scared to purchase homes or are just staying where they are."

In fact, Zaferatos said in her experience, she has seen many home-owners dropping their list price.

"The ones that have their property listed, they are dropping the list price because they don't know what's going to happen," she said. "They are bringing the list price down to see if they can sell the home."

As for the rush of refinances, Zaferatos said she hasn't seen the rush of refinances as Starcher has seen in the Kanawha County area. Instead, she said it has been more of a mix between calls to refinance and first-time home buyers.

But one thing worries Zaferatos about the home-buying market.

 "If we end up losing our coal and if our jobs get shut down with coal, my prediction won't be correct," she said. "People aren't going to buy homes or cars. They are not going to have the money. Most people in this area are coal miners. So if they shut down our mines, it's going to hurt not just guys working there but small businesses and other businesses."