After 20 years of renting in Boston and later in Spokane, Florence Mwangi decided it was time to try and buy her first home.

The 56-year-old caretaker, from Kenya to the United States, chose what many believe to be the perfect time: Interest rates have been so low that it makes expensive homes more affordable. However, these same forces have in part led to an extremely low number of homes on the market, bringing the median price of Spokane homes to historic highs.

“I praised,” Mwangi said. “I was looking to buy a house.

Her real estate agent has found a home for Mwangi in northwest Spokane. However, the first two banks she tried either wanted too much money as a down payment or turned her down.

Then Mwangi called the STCU. A loan officer called her back four hours later. She was approved for a loan that would allow her to purchase the house.

“The sale is still ongoing. We haven’t closed yet, ”Mwangi said. “I can’t wait to get into the new house. I am very excited.”

That same excitement prompted thousands of homeowners to flood the region’s banks, taking advantage of low interest rates.

Some homeowners refinance to lower their monthly mortgage bill, others take out home equity lines of credit to upgrade their existing home, and a few convert standard 30-year mortgages to 15-year or even 10-year mortgages, in effect. paying off their debt sooner, several bankers said.

“It’s getting absolutely crazy,” said Jack Heath, president and chief operating officer of the Washington Trust Bank in Spokane. “We have record months every month, both for new home purchases and for refinancing existing purchases. “

Even though the pandemic has ravaged the hospitality, restaurant and travel industries, low loan interest rates have prompted many homeowners to pounce on the relatively cheap money. Banks like Numerica Credit Union are processing a record number of loans.

Troy Clute, senior vice president of Spokane Valley-based Numerica, said his organization processed about 62% of home purchases in 2019, compared to 38% of refinanced loans. But in 2020, Numerica processed 36% for the purchase of new homes and 64% for the refinancing of existing mortgage loans.

“That doesn’t mean purchases have dropped,” Clute said. “They are at the same level. But, as a percentage of activity, they have fallen. Last year through July, we made about $ 40 million in (refinanced loans). This year through July, we’re at $ 119 million.

Ezra Eckhardt, CEO of STCU, said his institution has seen the same stampede of people taking advantage of low interest rates.

“Last year we had a record production year for us,” Eckhardt said. “We will get past that this year by the end of August.”

Demand exceeded the number of homes put on the market. Eckhardt also believes that the number of people coming from elsewhere to settle in Spokane and northern Idaho has had a dramatic impact on house prices.

“One of the reasons the housing market is so aggressive is that there haven’t been the same number of housing starts and not as many inventories,” he said. “The second thing is that after five months of the pandemic we have had an influx from other places.

“I’ve heard people want to sell to Seattle and move to Spokane,” he continued. “They don’t want to play with the demonstrations and the city center. It’s easier to get around here.

However, the forces that drove the domestic market can change quickly if job losses from the pandemic produce a corresponding number of foreclosures, he said.

“There is a lot of uncertainty about what will happen with long-term mortgage forbearance and rent cuts,” he said. “I hope the state and federal governments find a way to expand the current programs. If we start to displace these people, it will disrupt the housing market. “

While supply may change, low interest rates are expected to stay for some time, he said. Lending rates are based on the bank lending rate that is set by the Federal Reserve.

“They are forecasting record interest rates for at least two years into the future,” Eckhardt said. “I can’t imagine them increasing significantly over the next 24 months.”

Heath, of the Washington Trust, said that under the current situation, the lack of available housing has driven up prices and prompted other homeowners to make alternative plans.

“There’s such a lack of inventory that I can put a house up for sale for $ 300,000 and end up selling it for $ 315,000 or $ 320,000 due to auction wars,” Heath said. “But you are selling at a high point in the market. Then you have to turn around and buy. This kind of creates the problem.

As a result, the owners are looking inward, he said.

“People say, ‘Shoot, let’s stay where we are,’” he said. “Let’s get the money out. We will renovate this place and we will stay there.

Borrowers can usually lower their monthly payments if they can lower their interest rates by refinancing their existing mortgage. However, if they intend to withdraw money based on the increase in their home’s value or home equity, banks will usually only allow homeowners to refinance 80%. their home’s value and charge a higher interest rate.

Heath said economic disruption from the pandemic could eventually find its way into the local housing market.

“The stock market continues to perform very well. It’s a strange time, ”he said. “We’re trying to figure out – what’s the impact that will trigger a recession? “

Heath said he was keeping a close watch on the hospitality industry, as well as higher education and private schools.

“Usually, we’re behind the curve of feeling the pain and recovering from the pain,” Heath said of recessions and Spokane. “If the economy continues to suffer in the long run and employment really begins to continue to decline… then we will see the housing market suffer. But, we don’t see anything in the short term that will negatively affect this. “

The only way to inject certainty into the equation is to bring the pandemic under control, he said.

“Everything revolves around COVID-19 and how quickly we are able to fight” the virus,

Heath said.