RESIDENTIAL—L.A. Mortgage Activity Reaches Record Levels

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Los Angeles County lenders are seeing record-setting mortgage loan activity spurred by a rise in refinancings.

The dollar amount of first quarter 2001 refinances in Los Angeles County was up 39 percent over the first quarter of 2000, according to DataQuick Information Systems. The actual number of refinancings was up 35 percent in the same period. The dollar amount of mortgages as a whole was up 3 percent over the first quarter of 2000, but the total is slightly down (less than 1 percent).

“It’s very brisk with rates being where they are,” said Tom Swanson, area sales manager for Wells Fargo Home Mortgages. “We’re probably double the amount we were at last year.”

Swanson said he recorded $2 billion in mortgages and refinancings in all of 2000 in Los Angeles County. In May of this year alone, Wells Fargo recorded $540 million in mortgage activity and year to date the figure is $2.8 billion.

Lower interest rates, now in the 7 percent to 7.5 percent range, were behind a flurry of applications for loans in March and April, according to Tom Hammond, president of the California Mortgage Bankers Association.

Another factor: Los Angeles County and all of Southern California was not hit as severely by the tech crash as other parts of the state. “People buy houses when they’re feeling economically secure,” Hammond said. “When they’re not (secure) the last thing they want to do is buy a house.”

But Hammond said most people have already taken advantage of lower interest rates, and he expects mortgage activity to level off.

“My guess is, we’re probably plateauing in new home sales and refis,” he said. “The refi business has pretty much run its course. If we get another 50 basis points drop, we might see an increase, but mortgage rates are not falling. They’re kind of stuck at this level.”

Mark Kemp, executive vice president of Countrywide Home Loans, said anyone still looking for better rates may miss out. “Trying to predict the bottom of the market and waiting for it to occur is risky,” he said. “We all know rates can go up. If there’s an economic reason to refinance, then do it.”

Swanson issued a word of caution.

“The only thing we ask our loan officer is to make sure to match the new loan’s term with the term of the loan (the customer’s) trying to get out of,” Swanson said. “Putting you back into a 30-year term means you’re just going to pay more interest over a longer period of time. If you only have 20, 25 years left on a mortgage, don’t refinance for another 30 years.”

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