Mortgage Refinancing Has Lenders Expecting Record

Reflecting a surge in refinancing, California lending institutions are expected to make a record amount of real estate loans this year, according to a real estate information service.

Nearly $260 billion in real estate loans will be made this year by California financial institutions, according to La Jolla-based Dataquick Information Systems. If the current pace continues, this year will surpass 1989’s record $231 billion in real estate loans.

While refinancings accounted for 25% to 30% of the real estate lending market in 1989, they will make up almost 70% of the loans made this year, according to Dataquick.

“A lot of people who have been refinancing their homes probably wanted to sell but, with flat prices, they’ve decided to sit tight and wait. By refinancing, they’re taking advantage of the low interest rates,” said Donald L. Cohn, Dataquick chief executive officer.

During the third quarter of this year, total loan volume reached $62.5 billion, a 34% increase over the same three-month period in 1991.

Demand for refinancings should remain strong during the final three months of the year, particularly since mortgage rates moved up slightly last week, lending officials say.

At Great Western Bank in Chatsworth, Sam Lyons, senior vice president of mortgage banking, expects a rush of refinancing applications in the weeks ahead as consumers try to close loans by year end.

“We would highly encourage people to get everything going early,” Lyons said. “It can get fairly fierce” by the end of the year.

If not for the mortgage refinancing activity, Great Western’s real estate lending activity this year would have been “really down,” Lyons said. Instead, the bank expects to make $9 billion in real estate loans versus $7.5 billion last year.