June 21, 2012It would appear that the tide is turning when it comes to the home mortgages, with the number of people seeking mortgages increasing, according to local lenders. With interest rates at lows not seen for generations, property values leveling out, most foreclosures sold off and the warmest spring on record, people are discovering that now is the time to take the plunge and buy a house.
Adam McKim, vice president at SunTrust, said, "Not speaking on behalf of SunTrust, just my own two cents, but we are seeing an extremely strong purchase season this year." McKim said he believes the early start to spring really expanded the buying season, encouraging people to get out and start driving through neighborhoods and buying houses.
McKim said he also feels that people's attitudes are shifting from a negative place to one that is more positive. "2012 seems to have a different mindset – people are thinking maybe companies have downsized as much as they are going to, so the folks that are still on staff feel a bit more confidence that they're not going to be the next victim." That coupled with the affordability of homes in the triad has led McKim to the belief that, "We're starting to see a stabilization here in Greensboro."
That idea that people are feeling better about the economy is also one that Grady Patton, mortgage loan officer at First Carolina Mortgage, has seen. "People are taking advantage of the low rates," he said, adding, "The rates haven't been this low since World War II. They were about 4.5 [percent] then. I never thought in my 40 years in this industry that rates would be that low again."
Home buying activity has increased in Patton's opinion in our area due to the interest rates as well as some other factors. "A lot of foreclosures have been sold and occupied. Private sector homes are beginning to come back up in value." While there are still some areas of the country that seem to be caught in the grip of foreclosure fever, Patton said he thinks that Greensboro has leveled out. "We're in pretty good shape," he concluded.
David Nishan, certified mortgage planning specialist and the area sales manger for McLean Mortgage, is also optimistic about the triad home mortgage market. "The first thing that is encouraging is that purchase business and loan applications are up – that's nationally, not just in North Carolina." He added that school being out for the summer will also have a positive effect on home buying. "A lot of people like to move when the kids are out of school," Nishan said.
Despite the up tick in home buying interest among area residents, Nishan cautioned that the guidelines for getting a home loan are still very stringent. "The guidelines have not loosened up, and credit score algorithms have gotten tougher," he said.
Because of the changes in the way credit scores are compiled, Nishan said that someone who had a score of 680 two years ago could now have a score of 660 and have had no change in anything on their credit report. "If you can qualify there are some great houses out there, but lenders are being a lot more cautious." The current vigilance of lenders is especially difficult on the self-employed or contract workers, according to Nishan.
No one has a crystal ball when it comes to predicting what will happen in the next year with mortgage interest rates, but both Patton and Nishan said they believe that changes in the short term will be minimal. "I think based on everything that's going on out there the rates are going to remain flat," said Patton. "Any increase or decrease will be very little."
Nishan added, "Ben Bernanke said he will help keep rates low for at least another 12 months. The economy will dictate what will happen with rates after that." He feels that for rates to go up unemployment would have to go down to 7 percent. "The housing market employs a lot of people. So the better the housing market does, the better employment does as well."
Even if you aren't in the market to buy a home, the low interest rates on mortgages have made refinancing very attractive to many homeowners. "For the last year, there has been lot of activity in refinancing," explained Nishan. "If people aren't able to refinance right now it is because they are the ones who are upside down in their mortgages."
One area of home sales that doesn't seem to have benefited from the rates are homes valued over $800,000. Patton said, "We don't see a whole lot of big, jumbo purchases right now. That is one thing that has not gotten back up to speed like four or five years ago."
McKim described the current mortgage market as a "perfect storm" for buyers. "If folks are thinking about purchasing a home, there aren't many reasons right now why you shouldn't, and with the rates it is sort of like the icing on the cake." While McKim acknowledged that there are many factors involved in buying a home – do you have a down payment, how much can you afford – people buy homes for the same reasons they have always bought homes. "With how much prices have come down and with the crazy rates, people should seize the opportunity in front of them."