OakStar’s completed mortgage loans were up 26 percent in 2013, hitting $260 million. What do you attribute that to? It’s such a great market right now for purchases. Mondays, generally, you come in and have four or five calls for people who have bought houses over the weekend.
We are coming off of several years of incredibly low interest rates, so people have been refinancing. Now, there is a big turn toward purchases. The purchase market right now is changing. Where we were seeing 60 to 70 percent refinance, now we are seeing 65 or 70 percent purchase.
We are seeing different pockets of loan sizes; Out of the last five loan applications taken over the past couple of days, one was for $825,000, one was $75,000, two at $175,000 and one for $225,000. It’s a big range. If you had to pin it down, I would say $150,000 to $250,000 is the most common purchase price that I am seeing right now.
As interest rates increase, is the refinancing market dead in the water? People are still refinancing, but maybe doing it for different reasons. A good example is people were refinancing before to go from 4.25 percent to 3.25 percent or from a 30-year fixed to a 15-year fixed rate. There is still that going on, but it is for different reasons. People are refinancing for debt consolidation. They are also pulling equity out of their primary residence for the down payment on a second home or investment property purchase.
This market is exciting because we also are seeing a lot of first-time homebuyers. We are seeing a lot of people who are renting right now and maybe have a $700 rent payment and are finding out they can be homeowners with a similar payment.
Beyond that, we are seeing a lot of second home purchases around the Table Rock Lake area. We lend around the country. Last year, we financed homes in over 30 states. It’s also a good time for investment properties. Borrowers feel like if they can lock in an interest rate, it could prove to be a great investment as cost of living goes up in the future.
How does the current market compare to pre-recession loan volumes? It’s a different time. Banks and mortgage company programs were different. It’s hard to even compare the two because back then, there were all these crazy loan situations out there where people who probably shouldn’t be buying a house were able to. We certainly saw the repercussions of that as an industry. Credit qualification today is imperative. You have to have good credit and you have to prove income. We went through a time in the industry when mortgage lending from a risk standpoint just didn’t make sense. I hope we never go back to a time like that. You have to qualify. That’s the way lending should be.
OakStar topped the recent list of area’s largest mortgage companies according to Springfield Business Journal research, increasing local mortgage loan volume by 32 percent while the majority of other area lenders decreased. Are banks still struggling? There was a study in January that paints a big picture of what’s happening. The average profit on a mortgage loan in January 2013 was $2,350. In January 2014, the average profit on a loan was $150. You have a lot of challenges right now. You have all the regulatory changes that happened in January 2014, like the Dodd-Frank Act along with a general decrease in business industry-wide. It worked against a lot of different banks and mortgage companies. There have been a lot that have closed up operation for reasons of risk or decrease in profitability.
Is the housing market back? I feel like the housing market is back. I feel like it’s as strong as it has ever been. I have been doing this 19 years, and the housing market right now is very exciting. One of the reasons demand is so high is because banks went though a period of years where there was a decrease in construction. Banks said they weren’t going to do spec loans anymore. If you go through a couple years of that, your supply goes down. When things come about and people are buying houses again, there aren’t as many out there.
I’ve had a lot of comments from real estate professionals that if you like it, you better put a contract on it. If you wait a week, it will be gone.
What does the future of the home market look like in southwest Missouri? Construction lending is going to open up. We are seeing that already, more houses being built. In addition, outside of Springfield we are seeing tremendous growth. Ozark, Nixa, Republic and the Willard areas are exciting markets to watch.
OakStar Bank also has a mortgage production office in Kansas City. When I drive up to visit our office there, it’s kind of that same effect. You drive through all these outlying areas of KC and see where the growth has been. It’s exciting to see that in southwest Missouri. We should all feel very blessed to live in such a great part of the country.[[In-content Ad]]
