Mortgage Lending, Refinance Activity Slows in Quarter Two; Increase Expected as Interest Rates Fall

The Alaska Housing Finance Corporation (AHFC) released their second quarter report on Alaska housing indicators.  They surveyed mortgage lending activity the first six months of 2011.  It reported 3,381 loans were originated statewide for single family homes and condominiums for a total amount of $820 million.  This is compared to 4,340 loans for $1.02 billion in the first half of 2010.

2011 loans were down with an average downpayment of 10% compared to 12% at mid-year 2010. 

Single family homes accounted for 85% statewide mortgage lending activity with 53% of those loans occuring in Anchorage.  The Mat-Su contributed 16% of the volume, 10% in Fairbanks, 8% in Kenai, 6% Juneau, 2% Kodiak and 1% in Ketchikan.

Condos account for the remaining 15% of the loans with 87% of condos being financed in Anchorage.  Juneau accounted for 8% of condo loans with the Mat-Su and Fairbanks at 2% each.  Additionally, there were 377 units of multi-family housing financed by 81 loans in the first half of 2011.

There have been 282 new construction single family homes financed statewide through June of 2011.  Therefore, one in ten loans has been for new construction versus sales of existing homes.  Roughly one third of the new construction was in Anchorage and one third in the Mat-Su.  The remainder was in Kenai, Juneau and Kodiak. 

63 new construction condos were financed in the first half of the year.  This means one in eight condo loans were for new construction compared to existing condos.  91% of the new condos were in Anchorage with 7% in Juneau and 2% in Kenai.   

Refinance activity declined for the second straight quarter as interest rates moved higher at the beginning of the year.  There was $264 million of refinances completed in the second quarter of 2011 after $500 million in the first quarter and $947 million in the 4^th quarter of 2010. 

 

According to the Federal Reserve, conventional 30 year mortgage rates nationwide averaged 4.76% in January and have fallen to 4.11% in September.  An increase in refinance activity is expected when the third quarter results are calculated.  The two variables are inversely correlated.  There has historically been a spike in refinances when rates drop more than a half percent in a short period of time.

A copy of the complete report and other housing related data can be found at: http://www.ahfc.us/grants/housing_market_indicators.cfm