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Sections Home Page Local News AP News Archives Business Classifieds Event Calendar Forums Life Opinion Obituaries Photo Gallery Since We Asked Sports Tempo Weather Special Coverage 2006 Britt Festivals --> Shop Our Valley AutoFinder HomeFinder JobFinder Search Our Valley Special Sections Homelife Magazine Joy Magazine Readers Choice 2006 Oregon Golf Info Oregon Wine Info Our Valley Other Publications Local Links Ashland News eSouthernOregon Newspapers In Education Personals Moving Here Movie Listings TV Listings Volunteer Customer Service Advertise With Us Media Kit Place Classified Ad Contact Us FAQ's Home Delivery Site Map --> Email Story to a Friend August 9, 2006 Borrowers welcome stable rate Fed decides to keep the prime rate at 8.25 percent, which will help Southern Oregon consumers with adjustable rate mortgages By Greg Stiles Mail Tribune Commercial borrowers and consumers with adjustable-rate lines of credit and mortgages breathed easier Tuesday when the Fed ended a string of 17-straight quarter-percent rate hikes, leaving its short-term target at 5.25 percent. That kept the prime rate at 8.25 percent. Most home equity lines of credit and adjustable-rate mortgages are indexed to the prime rate, which has jumped 4.25 percent since 2004. "It has a psychological as well as financial impact," said Dan Stevens, a mortgage broker with Washington Mutual. "Any time you have an adjustable loan and the Fed raises rates, it puts on a mental and financial alert to be careful with cash flow. When we see the Fed stop with increases, it gives the mortgage industry and public a little bit of breathing room and tells them that rates are starting to calm down. It's well overdue." John Anhorn, chairman and chief executive officer at PremierWest Bank, said the Fed's pause may have a fruitful economic ripple. Advertisement "Hopefully, maybe this sends a signal that people will be able to do capital improvements and spend money that will create jobs," Anhorn said. Consumers typically use home equity lines to buy cars, boats, remodeling projects, new drapes, carpets or expensive toys. "They put it on their line because they feel they can work it into their budget," Anhorn said. "But people got a little antsy, knowing the Fed was raising rates every quarter." Home equity loans became increasingly popular when the Fed rate was in the 1 to 2 percent range in the early 2002 as they've gone regularly in recent years, its dampened interest and driven some borrowers to seek fixed rates. "As payments keep going up and up, that's been good for our business as people got out of adjustable-rate loans for a fixed second mortgage," said Jeff Barry, a mortgage lender with People's Bank of Commerce. He said long-term 15- and 30-year mortgages — not directly affected by the Fed rates — have been holding steady and have been among the lowest this year at 6.25 percent for a 30-year fixed mortgage. "There are some educated shoppers and some not so educated shoppers," Barry said. Lately, people have been jumping to lock rates before the Fed meets. Now that they've decided not to do anything, people might hold off a little longer." At least another few months, borrowers can re-examine their options without automatically assuming financing costs will rise. "I think there is going to be shift in sentiment," Steven said. "People are going to be a little more comfortable knowing that at this point, the Fed has stopped the rate hikes for now." Reach reporter Greg Stiles at 776-4463 or at [email protected] Mail Tribune Home | Local News | Sports | Business | Obituaries | Life | Opinion AP News | Archives | Site Map | Community | Classified Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback online casinos news Home Security Systems California Casinos Men's Clothing Southern Oregon Loans --> GMAT Prep Fundraisers Send Flowers Entertainment Guide --> Casinos Canada Trunks, Footlocker Online Casino Reviews Advertisements Advertisement