No. 1 S&L; Offers Fixed-Rate Home Loan at Less Than 9%

American Savings, the nation’s biggest savings and loan, Monday offered a fixed-rate mortgage below 9% for the first time since the mid-1970s, a move that is likely to continue a resurgence in home refinancings and sales of existing homes.

Stockton-based American said it was lowering its fixed mortgage rates by three-quarters of a percentage point, to 8.75% for 15-year loans and 9% for 30-year loans. Both loans carry fees of 2 points plus $250 (one point equals 1% of the loan amount).

“We wanted to be even more competitive and be among the leaders in pricing,” American spokeswoman Layna Browdy said. “The current interest rate environment we believe supports that decision.”

Other major lenders said they may follow the move by American, which has continued to rely largely on fixed-rate loans while many other institutions have moved to adjustable-rate loans, which are less risky to lenders.

“We are meeting (today) and there may be some pricing changes,” said Melissa Johnson, a spokeswoman for San Diego-based Home Federal Savings, another aggressive marketer of fixed-rate loans. It currently charges 9% on both 15- and 30-year loans.

American joins several mortgage bankers in California, as well as banks and S&Ls; in other states, that have cut fixed mortgage rates to below 9% in recent weeks. However, all of the sub-9% rates at California mortgage bankers were for 15-year loans, with none charging below 9% on 30-year commitments, said Zan Beckstead, executive vice president of the California Mortgage Bankers Assn.

Some of the sub-9% rates at other institutions across the country require borrowers to pay fees as high as 4 points.

Nationally, the average rate on 30-year fixed loans as of last Friday was about 9.6%, according to the Federal Home Loan Mortgage Corp. Introductory rates on adjustable mortgages, whose interest rates are changed periodically, have fallen as low as 7.375% at some banks and S&Ls; in California and even below 7% elsewhere, lending officials say.

These drops have triggered a renewed surge in refinancings, although not yet at the torrid pace seen during the first half of 1986, when fixed mortgage rates fell below 10% for the first time since the late 1970s. That surge in refinancings triggered such a heavy demand for loans that some institutions took as long as five months to process and approve loans, up from the normal four to eight weeks. Those delays angered many consumers who ended up taking higher rates than those prevailing when they first applied.

Refinancing volume tailed off somewhat last summer when fixed mortgage rates began rising above 11%.

Sales of existing homes surged 2.9% in November to their highest level in seven years, according to the National Assn. of Realtors.

American’s Browdy said home-loan volume in December at her institution was higher than in previous months, although part of that surge could have been fueled by tax reform. Individuals selling homes before year-end beat an increase in long-term capital gains taxes under tax reform, while those buying properties for investment purposes locked in more-favorable depreciation schedules.