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Local banks see influx of home loans

Low rates keep fueling market

The economic slowdown due to COVID-19 did not stop local lenders from helping homeowners and buyers take advantage of historic low mortgage rates during the second quarter.

Freddie Mac reported Thursday interest rates falling below 3 percent for the first time in 50 years. The average 30-year fixed-rate mortgage was 2.98 percent.

Local banks reported a constant flow of applications and approvals for new mortgages and refinances.

“I have been the busiest I have ever been in real estate mortgages,” said Chris Moreno, First Financial Bank vice president.

“I closed a little over $5 million for the second quarter of 2020 – combination of real estate refi’s, purchases, home improvement and auto loans. Rates are still in the mid to high 2’s. We haven’t had too many issues getting people qualified for homes for those that are still employed. I currently have about $2 million closing this month.”

Andrew Rottner, executive vice president and chief lending officer at First State Bank, said the low rates are overcoming the other economic factors to fuel the market.

“Even with the COVID-19 pandemic, 2020 has been a very strong year so far in the consumer real estate market,” Rottner said. “It is a bit puzzling, but the extremely low rate environment is a big factor.”

He pointed out that Wise County’s location and it remaining a desired destination for those home buyers looking to get out of metropolitan areas has buffered it from many ill effects from the slowdown.

“For Wise County, I think one of the mitigants to this potential downturn is the large volume of people we see moving out of DFW,” Rottner said. “People are wanting to get out to the ‘country’ where they can own a couple of acres and have less people around them. It is far more peaceful, and they feel safer. I believe this trend will continue in coming years, and we are already seeing it now.

“We are seeing a much higher volume of construction loans in 2020 than we did in the same period of 2019. Our purchase money mortgage business is up over 20 percent from 2019. The mortgage department has been extremely busy all year with refinances and new mortgages. Again, I think some of this is attributable to people wanting to buy an affordable clean new home and not a lived-in home due to pandemic reasons. Most of the activity has been in the $400,000 and under price range.”

Legend Bank has also seen many homeowners looking to take advantage of the low rates to refinance.

“From what we are seeing, the market is remaining strong. Right now approximately 60 percent of our business is refinances with the other 40 percent being purchase and new construction,” said Tim Lambert, Legend Bank president of mortgage lending. “We have not seen an abnormal amount of denials due to borrowers not being able to qualify because of the current ‘economic situation.’ We have also seen an uptick in purchases with people wanting to take advantage of the lower rates. Refinances have boomed since the drop in the rates going back to March.”

Those struggling to get approval are applicants with lower credit scores along with borrowers choosing a forebearance and those going for jumbo mortgages ($510,400 or more). Self-employed borrowers are also facing more scrutiny.

While the market remains hot, Rottner said there are a few troubling signs in the long-term.

“In our opinion, there will be negative repercussions from the pandemic and those could intensify the longer the pandemic lingers on,” he said. “There will be high unemployment, and many businesses will file bankruptcy or shut down. Those factors will eventually have an impact on the real estate market. The massive stimulus pumped into the economy in just a few months has kept things afloat and is reflected in the year-over-year increases in sales tax revenues in April and May.”

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