Last year, lenders trotted out a wide variety of new mortgage products in an effort to stimulate business.

This year, though, new-product offerings have declined because trends in interest rates have made made plain vanilla 30-year fixed-rate mortgages the loans of choice for most consumers.

That's what lenders said in recent interviews. They agreed that since the Federal Reserve pushed short-term interest rates down recently, mortgage bankers have been playing a new ball game. The buys of summer, they said, were the standard 30-year - as well as 15-year and seven-year - fixed-rate loans.

Most executives said the return to a fixed-rate market means consumers are looking for less-complex loans.

"The fixed-rate products are doing spectacularly compared to last year," said Carroll Justice, senior vice president of secondary marketing at Dallas-based Sunbelt National Mortgage Corp., a subsidiary of First Tennessee Bank. "Between January and June we've had a threefold increase in production."

"When it is easy to sell any mortgage product, especially at low interest rates, you don't particularly see a lot of innovation," said Keith Gumbinger, an analyst at HSH Associates, a real estate information company in Butler, N.J. "The expense of developing, marketing, and advertising a product is something bankers think a lot about."

One executive who agreed was James Maynor, chief executive officer at First Union Mortgage Corp. in Charlotte, N.C. He said that the market has changed so that they are selling more of the longer-term fixed-rate mortgages.

"They seem to be the product that helps define what the consumer wants," Mr. Maynor said. "We haven't felt the need to introduce new products."

Asked if new products would be introduced in the next six months, Mr. Maynor said there were no definitive plans he was prepared to discuss.

"Hybrid ARMs still show some popularity," Mr. Gumbinger said. "But it has been waning as interest rates have fallen off on the long end."

Portfolio lenders prefer to make adjustable-rate loans. Some of these lenders have cranked out new mortgage products based on existing ones - and they said the new mortgages were doing well.

Sam Lyons, senior vice president of mortgage banking at Great Western Bank in Chatsworth, Calif., gave one example.

In March, his bank introduced a Libor indexed mortgage, and it's doing well in a fixed-rate environment, Mr. Lyons said. "Business has risen about 40%," he said.

When Great Western introduced the loan, which indexed to the 11th district cost of funds, it was especially popular on the West Coast but it needed a supplement, Mr. Lyons said. "Since the rate is fairly volatile on its own, we take a 12-month rolling average and the percentage is smoothed out, eliminating the volatility you would see in a standard type of loan," he said.

Since Libor is used as an international index, Mr. Lyons said it makes loans more liquid for collateral use in borrowing. "This doesn't directly affect the consumer, but indirectly - we can sell the loan readily, and it tends to bring down the cost for the consumer," he said.

Asked how the first half of 1995 was for Great Western, Mr. Lyons said that as rates dropped, competition in fixed-rate mortgages started to rise, and revenue was off for the second quarter.

"We would love to have the first quarter keep rolling," he said. "There are some parts of the country that are showing stronger gains than others. It looks like a very competitive year for us."

At North American Mortgage Co., Terrance G. Hodel, president and chief operating officer, said buydowns, in which borrowers get a lower rate in exchange for additional points, were quite popular in the first half.

"With the fall of interest rates, the premium for the buydown is getting to the point where it is not as attractive as it used to be," Mr. Hodel said. "Now regular fixed rates are getting competitive with the 11th district so it is not necessary to have it."

Those interviewed agreed that if rates stay down and the yield curve stays flat, the mortgage market will continue to see strong demand for fixed-rate loans.

"When the Fed does this, there are more rate drops to follow," said Mr. Lyons.

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