Monday, November 5, 2012

Mortgage payoffs up 22 percent in Colorado during 2012

The number of mortgage loans paid off in Colorado was up 22.8 percent during the first three quarters of 2012 compared to the same period of last year, and activity was also up from the second quarter of this year to the third. According to a new report released today by the Colorado Division of Housing, public trustees in Colorado released a total of 218,138 deeds of trust during the first three quarters of 2012, and there were 177,585 releases during the same period last year.

Typically, a release of a deed of trust occurs when a real estate loan is paid off whether through refinance, sale of property, or because the owner has made the final payment on the loan. Release activity rises as refinance and home-sale activity increases.

For the third quarter alone this year, releases of deeds of trust increased 54.4 percent to 78,240 from the 50,682 deeds released during the third quarter of last year. Releases were up 20.2 percent from the second quarter of this year when there were 65,090 deeds released. The third quarter’s total was the highest quarterly total recorded since the fourth quarter of 2010.

“The 30-year mortgage rate was at a record low of 3.55 percent during the third quarter, and that has really helped push up refinance and purchase activity,” said Ryan McMaken, an economist with the Colorado Division of Housing. “Home purchases have been held back somewhat by lack of inventory, but refis appear to be increasingly common in recent quarters.”

McMaken noted that release activity has increased year-over-year for the past four quarters, reflecting six quarters of declines in the 30-year conventional mortgage rate, and as growing demand for real estate in Colorado has slowly driven up prices.

Trends in release activity were not uniform across the state, although all of the 21 counties surveyed for the study reported increases in release activity from the third quarter of last year to the same period this year. The largest increases were reported in Douglas and Jefferson counties where release activity increased 73.2 percent and 71.5 percent, respectively. The smallest increases were in Teller and Fremont counties where releases increased 11.5 percent and 15.0 percent, respectively.

Adjusted for the number of existing housing units in each county, the counties with the highest rates of release activity were Douglas, Summit and Boulder counties. The counties with the least activity were Pueblo, Fremont and Delta counties.

“We see that the counties with the most release activity tend to have higher incomes and are particularly popular places to live,” McMaken said. “It’s easier to refinance a loan in places like that, but even the lower-income counties are showing increases in release activity, which shows that the trend is widespread.”

Totals for releases of deeds of trust are collected quarterly by the Colorado Division of Housing. This report tracks releases of deeds of trust as reported by public trustees in Colorado. The report includes twenty-one counties which are chosen based on population size and to ensure that as many regions of the state as possible are represented. More than 90 percent of all occupied households in Colorado are within the twenty-one counties chosen.

A deed of trust is similar to a mortgage and is a lien on real property to secure payment of an indebtedness.The deed of trust contains a grant of the property to the public trustee for the benefit of the holder. The deed of trust is released when the debt is paid in full.