Santa Fe mortgage brokers and bankers are experiencing a rush of mortgage applications as borrowers react to lower rates by refinancing mortgages and, to a lesser degree, buying new homes.

Despite that activity, many lenders say that overall home sales in Santa Fe are still slow, particularly for houses costing between $200,000 and $500,000. Homes priced at more than $1 million are more active.

Lenders are happy to be able to offer the lower rates.

As a result, "(mortgage) applications are definitely up," said Marty Enfield, who is with Century Bank's lending department. "It's primarily because of lower interest rates. We're seeing refinances and purchase applications for houses in different price ranges."

Although business has picked up, Enfield added, the local market "is still slow — it's the slowest I've seen it."

Real-estate numbers from the Santa Fe Association of Realtors for the fourth quarter of 2008 will be released later this month.

The buyers who are applying for loans "are prepared and pre-qualified," Enfield said. "They have good credit reports and can prove their income."

Interest rates have fallen since the Federal Reserve last month said it would buy up to $500 billion in mortgage-backed securities in an effort to bolster the housing market.

Starting early this month, the Fed will buy securities guaranteed by the home-loan giants Fannie Mae, Freddie Mac and Ginnie Mae.

The average rate for a traditional 30-year fixed-rate mortgage is now around 5 percent, while the average rate for a 15-year fixed-rate mortgage is around 4.80 percent.

Enfield, who ran her own company, Access Mortgage, for seven years, said she had "a really good run and made lots of contacts but is now pleased to be back with Century Bank, where she worked previously.

Ginger Sullivan of Anasazi Mortgage said the mortgage business has changed radically since the downturn in the credit markets.

"It's very critical to have full documentation" when applying for a mortgage, she said.

"The way they do it now, the first thing a lender does is pull a transcript of the applicant's tax return. If there are any irregularities, "the lender won't touch the applicant."

"I tell people you'd better be prepared and you'd better be straight with your taxes," Sullivan said.

Applicants also need to be aware that their credit-card records will be subject to scrutiny. If there are late payments or other problems, credit scores can suffer.

"The credit-card thing is so important," Sullivan said.

Jim Gay, a broker with American Capital Mortgage, said, "There are definitely a lot of refinances. The rates are very good — they're hovering around 5 percent."

Gay had one lender quote a rate of 4 3/4 percent but only for one hour.

"It's been pretty volatile," he said. "It's anybody's guess whether they're going to go lower or not."

The Santa Fe real-estate market is very slow, Gay said, but he expects sales to start picking up in January and February.

"I can't quantify it, but it's my impression in talking to people. Santa Fe real-estate is so desirable that those who have the money to buy have no reason to wait any further. This is as good a buying opportunity as it's going to get."

Qwest Mortgage's John Ruybalid said his firm has received "a lot more inquiries" about refinances now that rates have dropped.

But applicants must be prepared to prove their income by presenting tax returns, for example, because "stated-income mortgage programs are no longer available," he said.

Ruybalid also said he has seen an uptick in applications for reverse mortgages, his specialty, because people are finding their portfolios have been diminished by the poorly performing stock market and are looking at their home equity as a way to supplement their income.

A reverse mortgage allows a person to tap the equity in their home without having to sell it or take another type of loan. Reverse mortgages can be fixed or variable rates.

Information from the Associated Press was used in this report.

Contact Bob Quick at 986-3011 or bobquick@sfnewmexican.com.