Ninety-six exhibitors set up shop Monday in the Mohegan Sun Convention Center (above) for this year’s “Winter Expo in the Sun.” The Connecticut Mortgage Bankers Association and the Connecticut Association of Mortgage Brokers put on the annual event.
First-time homebuyers, condo shoppers and people looking to refinance adjustable-rate mortgages may represent the key markets for the mortgage industry in 2007.
On the whole, current national numbers pertaining to the industry pale compared to 2005. The National Association of Realtors reports that total existing-home sales dropped 8.4 percent in 2006 to 6.5 million units from 7.1 million in 2005. Meanwhile, a report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development states that the number of new housing units started in 2006 fell 12.9 percent to 1.8 million, versus 2.1 million in 2005.
So the search was on for market segments showing signs of strength during Monday’s “Winter Expo in the Sun” convention at the Mohegan Sun Convention Center in Uncasville, put on by the Connecticut Mortgage Bankers Association and the Connecticut Association of Mortgage Brokers.
“The condo market is unbelievably strong,” said Joseph J. Ferraro Jr., president of Sterling Financial Group in Branford and treasurer of CTAMB.
The baby-boomer generation, in particular, is moving from single-family homes into condos, he said. Some of those buyers already have paid off their first mortgages, he added, so they are able to take on paying for a new condo without necessarily having to sell their houses right away.
In addition, the boomers’ children like the relative affordability and reduced maintenance that comes with buying a condo, Ferraro said. And he remains optimistic about the first-time buyer segment even when it comes to single-family homes.
“[First-time buyers’] incomes haven’t declined,” he said. “But the prices have.”
If the current trend is indeed favoring the more affordable properties, such as condos and first-time buyer sales, the mortgage figures are reflecting that trend. Numbers from The Warren Group, parent company of The Commercial Record, show that the state’s loan sizes are getting smaller.
In year-over-year comparisons through November, the number of mortgages increased 11.27 percent in 2006 to 205,958 versus 185,105 in 2005. Meanwhile, the total dollar volume remained nearly flat, slipping 0.21 percent to $56.2 billion.
As a result, the average mortgage size fell 10.31 percent to $273,052 in 2006, compared to $304,455 in 2005.
‘A Very Big Deal’
Potential buyers looking for deals on housing may now find themselves eligible for a break on mortgage insurance, too.
A new federal law, enacted in January, makes mortgage insurance premiums 100 percent tax deductible for households with an adjusted gross income of $100,000 or less. The law applies to both purchase and refinance loans closed on or after Jan. 1, 2007.
“This is a very big deal,” said Neal McGrath, an account manager with mortgage insurance provider Mortgage Guaranty Insurance Corp. McGrath was one of the presenters at the expo’s workshop entitled “Options and Opportunities in a Changing Market.”
The statewide total for loans with mortgage insurance originated in 2006 was $1.8 billion, McGrath said. “This year,” he added, “is going to be dramatically larger than that.”
Mortgage insurance is required unless the borrower can make a down payment of at least 20 percent on the loan. For households that qualify, taking advantage of the new tax break may be more appealing than trying to put 20 percent down on a mortgage.
McGrath also said he sees opportunities for 2007 in refinancing – specifically, refinancing adjustable-rate mortgages.
Nationwide, 40 percent of all 2006 mortgages had adjustable rates, he said. In 2007, an estimated $2 trillion worth of adjustable-rate mortgages will recast, he said.
While those numbers may suggest a potential push for the refinancing market, Monday’s expo also included some signals hinting that the industry is focusing on Connecticut.
“This year we have a lot of new exhibitors here,” said Barbara Goodrich, executive director of the Connecticut Mortgage Bankers Association.
This year’s expo had exhibitors coming in from all over the country – from states as far away as Oregon, California, New Mexico and Florida – looking for business in Connecticut, she said.
Wholesale lender Bismark Mortgage Co., which is based in Bellevue, Wash., was one of those exhibitors.
The company, which specializes in new-construction single-family mortgages, has been in the Connecticut market for three years, but plans to give the state some extra attention in 2007.
Unlike other markets trying to recover from a “housing rush,” such as in the southern and western parts of the country, Connecticut “doesn’t feel to be saturated,” said Bismark National Sales Manager Aaron Boles. “It still holds a lot of potential in the coming year.”
“There still is a market here for builders and borrowers alike,” he said.
Despite reports of waning new-home construction, Bismark’s mortgage volume remained flat in 2006 versus 2005, Boles said, adding that he expects the company’s volume from Connecticut to grow in 2007 over the 2006 performance.
If the attendance at this year’s Winter Expo matches the number of last year, Boles should get plenty of opportunities to meet local mortgage brokers.
Last year’s attendance was around 1,000, and “we’re hoping for the same or a little more,” Goodrich said on Monday. The total number of exhibitors was 96 this year, she added, up from 90 a year ago.
