Volume of refi activity contrasts with home purchases

November 29, 2010
| By Pete Daly |
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Home mortgage rates are good, said David R. Ondersma. “I wish I was buying.”

Ondersma is president of the Western Michigan Chapter of the Michigan Mortgage Lenders Association and a vice president in retail lending at Macatawa Bank in Hudsonville.

On the other hand, there’s hardly anyone buying homes, added Ondersma in early November, when a 30-year mortgage could be had at 4.25 percent interest and a 15-year at 3.75 percent.

“It seems like the rates aren’t spurring people on to buy,” he said.

Ondersma said a quick scan of his records indicated that in October, his bank did roughly 80 to 90 mortgages, and only about seven were purchases of homes. The rest were refinances to capture that lower interest rate.

“We’ve seen a pretty steady volume of refi activity,” agreed Rob Atwell, also a vice president at Macatawa Bank and the retail lending team leader.

Atwell said the number of new mortgages at Macatawa from January through October was up about 30 percent over the same period last year, but the actual total dollar volume was slightly less.

Steve Barnum of Transnation Title Agency of Michigan in Grand Rapids, one of the largest title agencies in the state, said refinances were probably about 20 percent of the new mortgages Transnation was involved with about five years ago. Now about 33 percent of its mortgages are refis.

Barnum, who serves on the state board of the Michigan Mortgage Lenders Association, indicated that Transnation has always had “a very healthy purchase closing” business as opposed to mortgages involving refinancing.

David Miedema of Miedema Realty Inc. of Grandville has been in real estate for 17 years. He said there are “still buyers out there” in the residential real estate market, “but there’s some uneasiness of where the market is going to go from here in the next year.”

Home sales in general picked up in the first half of the year, while some were still taking advantage of the first-time homebuyers’ tax credit, and prices came up somewhat, too, he said. But the foreclosures and people facing foreclosure are still affecting the market.

Miedema noted that as of October, about 46 or 47 percent of all listings on the market here were either short sales or foreclosures.

“We need to get through these foreclosures and short sales. The market has to absorb them — and the government stay out of it,” Miedema said, adding that will take time.

Still, it’s an improvement over 18 months ago, when as much as 65 or 70 percent of the homes on the market were short sales or foreclosures, according to Barnum.

“The mortgage lenders are busy,” said Ondersma, mentioning that he had heard of interest rates locking in for 75 days at some institutions, while at other places rates were locking in for 90 days because things were backed up “just because of the influx of people refinancing.”

The industry is looking forward to a shift back to actual sales of homes, as opposed to just refinanced mortgages.

“We need to get back to people buying from people, versus people buying (homes) from the banks. And short sales,” said Ondersma.

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