Tuesday, December 13, 2011

Home-loan repayments in Colorado fall to new low during third quarter

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The number of real estate loans paid off in Colorado was up 3.4 percent during the first three quarters of 2011 compared to the same period last year. According to a new report released today by the Colorado Division of Housing, public trustees released a total of 177,409 deeds of trust for the first nine months of this year, rising from 2010’s nine-month total of 171,596. 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.

For the third quarter alone, however, the number of deeds of trust released this year fell 13.2 percent. Releases fell from 58,177 during 2010’s third quarter to 50,506 during the same period this year. Releases also fell from the second quarter of this year to the third quarter, falling 6.3 percent from the second quarter’s total of 53,878.

“Release activity is connected to activity in refinances and in new real estate purchases. So, when a lot of people are buying new homes or refinancing their mortgages, we see a surge in releases,” said Ryan McMaken, a spokesman with the Colorado Division of Housing. “Releases have gone down now for three quarters in a row, which tells us that there’s been less refinance and purchase activity going on out there in recent months.”

According to the report, the number of deeds of trust released during the third quarter of this year was the lowest quarterly release total reported since the Division began collecting quarterly data in 2008. Releases totaled 50,506 during the third quarter of this year, coming in below the 52,656 releases reported during the fourth quarter of 2008, following the financial crisis.

Since release totals reflect trends in refinance activity, releases tend to increase following declines in mortgage rates. Releases peaked in 2003, for example, following three years of declines in mortgage rates. Since 2008, however, release activity has remained low in spite of low mortgage rates.

“Even though mortgage rates have headed down this year to very low levels, we haven’t seen the kinds of increases in refinance and purchase activity that one might expect,” said Billie Jo downing, a Realtor with Re/Max Action Brokers in Loveland. “Tighter lending standards are certainly affecting the overall volume.”

Trends in release activity varied by county. Year over year for the third quarter, release totals decreased in most counties surveyed. The only counties in which releases increased were Adams, Douglas, La Plata, Mesa, Summit and Teller Counties. Release activity during the third quarter fell 29 percent and 26 percent in Pueblo and Weld counties, respectively. Totals increased 76 percent in La Plata County and 67 percent in Mesa County.

When adjusted for the number of households in each county, the counties with the most release activity were Summit, Douglas, Park, Teller and Boulder.

“Many factors can affect local release activity such as the mobility of the local population, job creation, income level and the overall demand for real estate,” McMaken said. “Not surprisingly, many of the areas with more release activity are also areas either with relatively high job creation or higher income levels such as Larimer, Boulder and Douglas counties.”

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.