Low rates fuel refinancing boom

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Highlights:

  • Historically low rates increases refinancing activity.
  • Colorado loan pay offs jump 49% in the 4th quarter and 29% in 2012.
  • Homeowners in Douglas, Boulder and Summit counties were especially active for deed releases.

Historically low-interest rates fueled an increase in Colorado homeowners paying off their mortgages last year, often through refinancing, according to a state report released today.

The number of home loans paid off in Colorado jumped 49.1 percent from the fourth quarter of 2011 to the fourth quarter of 2012, and they were also up 29.4 percent for all of 2012 compared with 2011, according to the report by the Colorado Division of Housing.

Public trustees in public trustees in Colorado released a total of 86,816 deeds of trust during the fourth quarter of 2012, which was the highest quarterly total recorded since the third quarter of 2009, when 87,400 deeds were released, according to an analysis by the division.

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.

For the full year of 2012, releases of deeds rose to 305,141, and were at the highest level recorded since 2007 when releases totaled 327,457.

“The 30-year mortgage rate was at a record low average of 3.36 percent during 2012, and that has really helped push up refinance and purchase activity in Colorado,” said Ryan McMaken, an economist with the Colorado Division of Housing.

Trends in release activity were not uniform across the state, although 20 of the 21 counties surveyed for the study reported increases in release activity from 2011 to 2012.

The largest increases were reported in Douglas and Denver counties where release activity increased 38.2 percent and 42.5 percent, respectively. The only decline for the year was in Morgan County where releases fell 9.6 percent, and the smallest increase was found in Teller County where releases rose 1.0 percent.

Douglas, Summit and Boulder counties had the highest rates of release activity when adjusted for the number of existing housing units in each county. The counties with the least activity were Morgan, Teller and Alamosa.

“In many cases, the counties with the most release activity are places with lower unemployment and higher incomes,” McMaken said. “It’s easier to refinance in places like that, but release activity increased almost across the board in 2012, in even the lower-income 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 21 counties that are chosen based on population size and to ensure that as many regions of the state as possible are represented. More than 88 percent of all housing units in Colorado are within the 21 counties.

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. The read the full report, please visit the Colorado Division of Housing. 

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

 

 

 

 

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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