Arizona Mortgage Market Stable By Comparison
Mortgage delinquency and foreclosure rates may be going up, but Arizona seems to be among the more stable areas of the U.S. as pressure on some lenders shakes Wall Street, the Arizona Daily Star reports.
A survey by the Mortgage Bankers Association illustrates a seasonally adjusted residential mortgage loan delinquency rate of 4.95 percent nationally in the fourth quarter, up from 4.67 percent in the third quarter.
Arizona, by constrast, registered a default rate of just 3.51 percent in the latest data period, compared with the eight-state Mountain region’s rate of 3.88 percent over that time frame.
Among bad credit mortgage loans to borrowers with poor credit, Arizona saw a “seriously delinquent” rate of 2.80 percent in the fourth fiscal quarter, compared with a national rate of 7.78 percent.
The Mortgage Banker survey tracked 191,119 bad credit mortgage loans in Arizona compared with 855,196 prime loans during the fourth quarter. FHA loan and VA loan transactions add 82,345 to the total.
LoanPerformance, a mortgage data and analysis firm, tracks 2006 estimates for home loan size by market and subprime’s share of all purchase lending dollars in these markets.
- For Tucson, the median Arizona mortgage loan last year was $121,900 and the subprime share was 15 percent.
- By contrast, the typical Phoenix home loan was $145,200, while the subprime share was 24 percent.
- A separate survey, meanwhile, showed an increase in foreclosures in Pima County to 563 in January from 383 in December and 521 in January 2006. Statewide, foreclosures totaled 4,165 in January, up from 2,525 in December and 2,020 in January 2006, RealtyTrac reports.
Some Tucson mortgage lenders acknowledge the trend of higher foreclosures but see no fundamental weakness in the local market.
“Tucson’s market is very strong with a good employment base,” said Paul Volpe, loan officer and vice president at Nova Home Loans in Tucson.
Some foreclosures are the result of “liberal guidelines” in recent years when the housing market was red hot and people were scrambling to buy, sometimes by taking adjustable-rate mortgages that now are becoming more expensive due to higher mortgage rates.
Some buyers invested in housing expecting to cash in on rising appraised values, but when that phenomenon cooled, they were unable to sell and are stuck with mortgages they can’t afford.
Doug Olson, general manager of Arizona retail lending for First Magnus Home Loans, said Tucson’s “lending situation is still very good,” although the industry has become more conservative in recent months.
There has been “very significant” tightening of guidelines for lending in the last 60 days, he said, because of concerns about creditworthiness and property values. However, “we haven’t seen that significant a drop in housing value here.”
Subprime loans to people with poor credit histories constitute only a small share of the business at Nova and First Magnus, the lenders said. Another mortgage lender said that the market for existing housing priced between $175,000 and $350,000 remains strong.
SOURCE: Arizona Daily Star