Home loans slow down,
competition heats up By ROBERT STRUCKMAN of the
Missoulian
You may have heard the radio
advertisement asking what you get in return for your rent
check.
A roof over your head, an awning over a parking
spot.
“Isn't it about time the check you write at the end of
the month really counts for something?” asks the ad from
Consolidated Mortgage Inc.
The radio spot is a sign of the mortgage times.
The refinance market is down nationwide, and home mortgage volumes
may be growing more slowly than in recent years.
To fight for
market share, lenders and brokers are trying attract new home buyers
and are competing harder for the traditional market.
Corrie
Chaffin of Consolidated Mortgage said most of her firm's home loans
fall under the traditional category - a down payment plus a 30-year
fixed-rate loan - but niche loans are on the rise.
The
numbers from the Mortgage Banking Association of America aren't
stark. The volume of refinance loans in the first three quarters of
2005 nationally was less than half the sum for the same period in
2003.
Purchase loans have continued a moderate upward trend,
the same data show.
Larry Swanson, an economist at the Center
for the Rocky Mountain West, expects home values to remain strong in
western Montana but to grow more slowly than in recent
years.
“I don't look for our values around here to fall,”
Swanson said.
People are still moving to western Montana, and
construction activity remains healthy, he said.
Yet the
decrease in the refinance market will make a mark on the
industry.
“Lenders the last couple years have been spoiled
with the refinance market,” said Teresa Manlove, owner of Capital
Family Mortgage Co.
Still, Manlove is optimistic about the
real estate market.
“I think it's going to be strong but
competitive,” she said.
Slowly rising interest rates are
another factor, making home lending more competitive.
The
Federal Reserve Bank has raised rates a hair in the past year,
although they remain near historic lows. The Fed only indirectly
affects housing, which is tied more closely to long-term bond rates.
Yet as rates on 30-year fixed loans rise, consumers are shopping
around more than ever before.
That competition has kept loan
rates low, even as the costs to lenders and brokers have risen,
putting the squeeze on profit margins, said many local lenders and
brokers.
With thinner margins, lenders and brokers try to
stay profitable with higher volume.
“More businesses are
chasing fewer deals,” said Bill Darling of Mann Mortgage
Inc.
Darling plans to compete by adding more sales people and
to diversify geographically. He's opening an office in
California.
“That's a market we need to be in,” Darling
said.
He's also offering a greater number of loan products.
Those include packages in which the buyer borrows 80 percent of the
home price as well as a 20 percent down payment.
“We're
giving people options that didn't exist a few years ago,” Darling
said.
That's the mantra in the lending and mortgage brokering
world.
Chris Koppang of First Horizon Home Loan touted the
range of lending products available from his company. He said the
company has loans tailored to specific demographic groups and
occupations.
Chaffin at Consolidated Mortgage said the same
thing.
“Every person that comes into the door needs something
different,” she said. “We want to have the loan products based on
that.”
Darling put it simply:
“We're offering more
products and working harder to sell them,” he
said.
Montana's economy sees 4 percent
growth for third straight year
What a boom it
is.
“We haven't had back-to-back growth like this since
sometime in the 1970s,” said Paul Polzin, director of the Bureau of
Business and Economic Research at the University of
Montana.
For the first time in three decades, the state's
economy has grown by 4 percent or more for three consecutive years,
Polzin said.
The Montana economy grew 4 percent in 2005, 4.7
percent in 2004 and 4.3 percent in 2003, Polzin said. That growth
can be attributed to the continuing oil boom in eastern Montana and
the reopening of mines. Commodity prices are at all-time highs,
Polzin said.
“What do you think it is? The Californians
moving to town?” Polzin asked.
The question might have been
rhetorical, but detailed economic data is only available after a
two-year delay. In the short term, economists watch the various
industries and commodities markets and activity on the ground,
Polzin said.
Oil prices Wednesday remained at about $66 per
barrel, an extremely strong price by any standard.
But it's
not just oil, Polzin said.
“We're looking at commodities like
copper, zinc, nickel, lead,” he said. The high prices are not a
one-time fluke but due to sustained demand, he said. And the outlook
for coal is positive.
“Whenever you see (sustained
demand-driven high prices), industry investment is almost definitely
going to occur,” Polzin said.
Potential slowdowns in housing
construction could dull the increases from the commodity side, and
that's a risk, Polzin said. But major road construction bids might
offset or replace a modest downturn in private construction, he
said.
“You have to look pretty hard to see a negative side,”
he said.
