Home Refinancings Keep Central Mass. Banks Busy
If you aren’t refinancing your home mortgage, you probably just did.
Or you know someone who is.
Or you plan to refinance.
Or if you work for a bank or credit union, you’ve seen how busy your mortgage lending people have been.
The number of home refinancings is up — way up — making up more than 80 percent of mortgage activity one recent week, according to the Massachusetts Bankers Association. That’s up 60 percent from the middle of 2011.
Here in Central Massachusetts, local bankers are busy crunching numbers and having homeowners sign on the dotted line.
“It’s a big time for refis,” said Todd Donohoe, branch manager of Sovereign Bank in Oxford. “We’re doing extremely well for a bank this size, and hope to do $700,000 or more this quarter.”
“Business is booming,” added Mark O’Connell, president of Hudson-based Avidia Bank.
The uptick in the refi market, spurred in large part by low interest rates, has been a boon, especially for credit unions and smaller banks.local banks and credit unions.
“We retain servicing in all our loans,” said Scott Auen, vice president of mortgage lending for Digital Federal Credit Union, in Marlborough. He said many customers don’t like the idea of their loans being serviced by other, bigger banks, especially now. “That (personal attention) is a huge selling point for us right now, as well as being competitive in rates and service, he said.
Auen said DCU rolled out a 10-year, fixed-rate mortgage last year, a niche product responsible for 25 percent of its loan originations. It’s allowed people to pay down their mortgages significantly with a reduced term, he said, and homeowners are jumping now, while the rate is low.
The Oxford branch of Sovereign Bank is in the top 1 percent of the bank’s 750 branches for mortgage refinancings, said Donohoe, due in part to regular internal reviews of customers’ mortgage situations, which include research on home values by the bank’s mortgage officer. “Those who have been paying for a number of years might be in the six (percent) or high 5 (percent) now, and are going to switch from 30- to 15-(year loans) and get into a 3-percent range,” he said, “They’ll be able to save a lot of money over the course of the loan.”
He noted that the banking days of doing a hard sell on a loan product are over. Customers are receptive to a refinancing offer from the bank holding their mortgage more than they are from some telemarketer these days, he said.
It’s a sentiment of small-bank validation echoed by O’Connell.
“Some banks offered some ‘creative loan products’ in the heyday, let’s say,” said O’Connell. “Small banks are capturing back the market share they lost in the past 10 years, when bigger banks were more generous — or liberal — in their underwriting.”
Though people are preparing tax returns and looking at finances in general this time of year — it’s not necessarily a trend to see increased home refinancing, Auen said. “Historically it’s not a normal time of year to see a hike, but nothing’s normal anymore,” he said.
But Donohoe called decreased property values “the elephant in the room.”
Even with lower values, O’Connell said Avidia has seen a slight rise in new mortgages. “You still have to qualify,” he said. “You still have to have a job. But even though housing prices are soft, there are a lot of good bargains out there.”
For now, traditional refinancing is still not an option for some hit by unemployment or other factors.
But there is help for those who are underwater on their mortgages, owing more than their homes are worth, through the Home Affordable Refinance Program, or HARP loans, Auen said. “These are individuals who have done everything right and their home value has dropped,” he said.
Big Window
Donohoe, O’Connell and Auen all look forward to more low rates in the days and weeks ahead. And there’s reason to be upbeat.
The Washington D.C.-based Mortgage Bankers Association predicts rates for a 30-year, fixed-rate mortgage will stay below 5 percent through 2013. But it also forecasts a drop in refinancings by 60 percent. MBA spokesman Matthew Robinson said the potential market of homeowners who are able to refinance is shrinking because most people who are eligible have already refinanced their loans.
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