Refinancing Activity in County Declines 82%

Rising interest rates have reduced home refinancing activity in Ventura County to less than one-fifth its level of a year ago.

The drastic turnaround saw only 509 refinanced loans made in the county in October, down 82% from October, 1993, according to Dataquick Information Systems.

The slowdown in Ventura County is in line with a statewide decline of 84% in refinancings. In fact, statewide activity in such loans is at its lowest level in more than five years, according to Dataquick.

With rates on 30-year mortgages in the 9% range, compared with about 7% a year ago, many homeowners have seen the window close on their chance to lower their monthly payments by restructuring their loans, analysts say.

“The decline was expected, but it still hit the lending industry hard,” said Donald H. Cohn, Dataquick’s chief executive. “Most lending institutions have been trying to make up for some of the decline by increasing loan activity in other categories, especially loans to home buyers.”

But, he noted, the rise in interest rates is starting to put a damper on real estate sales too. Rates of all kinds are climbing due to money-tightening moves by the Federal Reserve.

The Fed’s actions could slow the long economic recovery, which has been considered more vulnerable in California than elsewhere, Cohn added. “There have been a lot of layoffs (in the state), and more are expected.”

Historically, about 30% of all loans made by lending institutions are home refinancings. A year ago, refinancing accounted for nearly 70% of loans nationwide. Last month, Dataquick reported, that share was down to less than 27%.

Interest rates on 30-year fixed-rate mortgages averaged 8.9% nationwide in October, up from 6.7% a year ago. That means the average monthly mortgage payment on a $135,000 refinanced loan was $1,080.93 in October, compared with $874.67 a year earlier.

Dataquick analyst John Karevoll said he believes that it will be several months before trends in the real estate market become clear. “Home buyers in October, November and December tend to be professionals who expect to rent the property out or fix it up for resale,” he said. “These people aren’t as concerned as the general public about mortgage rates.”

By early next year, the public’s mood should be evident, Karevoll said.

Sales of new and used homes in Ventura County totaled 810 in October, down from 925 in September and practically unchanged from 809 in October, 1993.