Wednesday, October 16, 2013

Home loan payoffs in Colorado fall during third quarter as mortgage rates climb

The full report. 

The number of home loans paid off in Colorado was up 13.9 percent from the third quarter of 2012 to the third quarter of 2013. According to a report released today by the Colorado Division of Housing, public trustees in Colorado released a total of 89,372 deeds of trust during the third quarter of 2013, which was one of the highest totals recorded in recent years, but which also reflected two quarters in a row of declines in activity in the face of rising mortgage rates.

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. Increases in release activity occur as refinance and home-sale activity increases, and rising release totals typically indicate increases in the demand for home loans and real estate.

Release activity fell from the second quarter of 2013 to the third quarter of 2013, dropping 5.9 percent.  There were 94,937 deeds released during the second quarter of this year.

“We’re now starting to see the effects of rising interest rates on release activity,” said Ryan McMaken, an economist with the Colorado Division of Housing. “While there’s a lot of demand for housing out there, and the numbers are still up compared to last year, these numbers show that the growth has started to taper a little as loans become more expensive.”  

Trends in release activity were not uniform across the state. Although 20 of the 21 counties surveyed reported increases in release activity from the third quarter of 2012 to the third quarter of this year, rates of increase varied substantially. The largest increases were reported in Adams and Weld counties where release activity increased 43.5 percent and 42.3 percent, respectively. The smallest increases were found in El Paso and Larimer counties where activity increased 2.7 percent and 4.1 percent, respectively. The only county to report a year-over-year decline in release activity was Summit County.

Adjusted for the number of existing housing units in each county, the counties with the highest rates of release activity during 2013’s first quarter were Douglas, Jefferson, and Broomfield counties. The counties with the least activity were Alamosa, Pueblo, and Delta counties.

“Those areas with more stable employment where borrowers are more likely to qualify for new loans are seeing the most activity,” McMaken said. “Southern Colorado, where employment is less robust, and where incomes are lower, is seeing less activity.” 

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.