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SBJ photo by EMILY LETTERMAN

A Conversation With … Carla Green on mortgage moves

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Is the mortgage market back?
It’s back barring any major catastrophe. We are seeing developments, and we are seeing construction loans like we have never seen before. We are seeing new subdivisions. There was a pent-up demand.

Arvest’s local completed mortgage loans were up 55 percent in 2016, hitting $99.7 million. What do you attribute that to?
The interest rates have been so good and the addition of a couple of lenders. We’re still seeing some refinance, but the purchase market has come back so strong. We are at over 75 percent of our business coming from purchase, someone buying a home. For a while, maybe not here in Springfield but for a big part of our company, it might have been 50 percent were refi. We never depended on that as much since we are a newer market.

As interest rates increase, is the refinancing market dead in the water?
It’s slacked off some. Interest rates were so low for so long, most people that needed to refinance did. But there were reasons people couldn’t when the guidelines were so much stricter. Or when they were underwater – you can’t refinance if your house was worth $80,000 and you owed $100,000. Now, there is wiggle room and people always have reasons to refinance, like a lot of credit card debt coming out of the last few years.

Is paying off debt attributing to refinances more than interest rates?
During the hard times, people built up debt, and we are seeing a few more cash-out refinances. Fannie Mae has come up with a great program to allow people to pay off their student loan debt and treat it as a rate-term refinance as opposed to a cash-out refinance. That means they will get the same rate to pay off student loans as they would get if they were just paying off their home. Student loans are one of the biggest factors in our business I’ve noticed over the past few years. It’s gotten more and more out of control because people owe so much. Our guidelines had tightened, but now they are swinging back a bit on the Fannie Mae side. It used to be if someone had $100,000 in student loans, even if their credit report showed they were on a reduced payment plan and their payment might be $300 a month, we had to count 1 percent of that balance. We had to count that as $1,000 a month payment. Fannie Mae is becoming more competitive against (Federal Housing Administration loan) terms.

What is Fannie Mae doing to gain those FHA customers?
They’ve come out with a program called Home Ready. You don’t have to be a first-time homebuyer to qualify, and it only requires 3 percent down instead of 5 percent. Home Ready does have income limitations.

Home prices are up 3.6 percent in April. Is that a good thing?
There isn’t enough inventory, not enough houses for sale. The market is great and everybody is busy, but we need more houses to sell.

We are back to seeing multiple offers on a house. Since December of 2016, the average listing price was $153,000 and average selling price was $130,000. Now, it’s gone to where the average asking price is $177,000 and the selling price $145,000. Everyone heard it’s a seller’s market, so they listed it for more.

What’s the mortgage market outlook?
We are seeing some loosening of restrictions. Some people say these things are what got us in the boat we were in, but the pendulum always swings too far one way or the other. Hopefully, this time we will have a happy medium with safety nets.

Carla Green is a senior vice president and mortgage loan manager with Arvest Bank. She can be reached at cargreen@arvest.com.

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