Home loan, refinancing activity on rise

We keep hearing how tough it is these days to get a home mortgage.

Federal requirements have tightened, bankers are more conservative in who they’ll lend to these days after getting burned in the 2008 mortgage debacle, and the lackluster economy often makes potential homeowners more cautious.

But there’s a lot more going on behind the scenes than meets the eye.

Numerous homeowners in Boulder County refinanced their existing mortgages in 2010 and the first four months of this year to take advantage of lower interest rates.

In addition, general mortgage lending also appears to be on the rise at the local branches of three national banks – FirstBank Corp. (based in Lakewood, but with seven locations in and around Boulder); Wells Fargo Bank, with 14 local branches, and Chase Bank, with 12 branches.

At FirstBank’s local branches, so far in 2011, both refinanced mortgage and purchase mortgage business is going gangbusters – about $20 million, or almost triple the $7 million in mortgages made in the first four months of 2010, said Jim Hall, market president of the Boulder region, which handles about $600 million in assets.

Hall did not give specifics about what percent of the total was refinanced mortgages and what percent was new mortgages to buy homes.

Boulder County’s mortgage market remains strong because the area is such a nice place to live and work, Hall said. In addition, bankers are working hard to market the products they have, since the bank came through the most recent financial crisis with flying colors and is well-capitalized, compared to some other banks in the region.

Investors also are looking for new units to buy, since a general shortage of rentals has pushed up rents in the county and across the metro area.

“From an investor perspective, we keep hearing that vacancies are down and rentals are going up. That’s a big piece of the market from where I sit,” Hall said.

In simple terms, if a FirstBank mortgage officer gives a customer a “yes,” the loan will close, he said. Summer is a traditionally busy time of year for both residential Realtors and mortgage brokers, and this year will be no different, Hall predicts.

Self-employed folks may still have problems getting a residential mortgage approval, however, Hall said, and more customers are coming to the table with 20 percent to put down on the purchase of a home.

Chase Bank branches in the Boulder-Broomfield area have seen a 147 percent increase in mortgage applications so far in 2011 over the same four months in 2010, and a 154 percent increase in approvals, said Ron Kershner, lending manager for the Metro North region of the bank, whose office is based in Westminster.

Refinancing is a strong piece of that uptick, in part pushed by the government-sponsored “Making Home Affordable” program in which a customer is current on mortgage payments but owes more than the home is worth. Chase can help a customer get a 125 percent loan-to-value mortgage under the federal program, Kershner said.

In general, as much as 90 percent of Chase’s regional business is from customers refinancing mortgages, he said.

Chase hired two new loan officers in the last year to work in its biggest downtown Boulder branch, which also could have helped create the uptick in business, Kershner said.

“It does seem like things continue to increase from a volume standpoint,” Kershner said.

At Wells Fargo, low interest rates also drove the number of mortgages done nationwide, said Greg Osborne, regional vice president of Wells Fargo Home Mortgage in Denver. Wells Fargo is predicting that its national mortgage market in 2011 will contract slightly to $1 trillion in loans from $1.55 trillion in 2010, Osborne said. The bank did not release specific numbers for the number of mortgages it has done in the Boulder County region.

The national market was expected to contract because interest rates spiked late last year and were expected to continue to rise through 2011, Osborne said. In the last 30 days, however, rates have dropped again, creating a “pleasant surprise,” for buyers, refinancers and bankers, he said.

Osborne attributed the most recent rate drop to the federal government’s second “quantitative easing” program, from which banks set their own interest rates.

Most homebuyers applying for mortgages these days have good credit scores and modest down payments – and they should definitely be able to get financing, he said. Osborne is extremely bullish on the current real estate market, which presents huge opportunities to those who can afford to take advantage of it, he said.

“It’s a fortuitous time – a buyer’s market, and a good one,” Osborne said.

Beth Potter can be reached at 303-630-1944 or email bpotter@bcbr.com.

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