Mortgage mania

By Dan Nakaso
Advertiser Staff Writer

Another dip in mortgage rates last month has prompted a renewed surge of business for Hawai'i's already booming loan industry, leaving lenders scrambling to keep up with volume that for some has as much as doubled.

Countrywide Home Loans sales manager Desiree-Ann Julian, center, home-loan consultant Greg Sekiya, left rear, and Sales Manager Brenda Reynolds, left, and production assistant Joji Balmilero have been kept busy in recent months by a flood of customers seeking new loans and refinancing of old loans. RIchard Ambo • The Honolulu Advertiser

The number of mortgage loan applications at Wells Fargo Home Mortgage has nearly doubled. At American Savings Bank, the amount of money being loaned for mortgages and refinancings has jumped 16 percent.

Bank of Hawaii, First Hawaiian Bank and Finance Factors are among companies where business is up from 25 percent to 35 percent in the past couple of months. Loan applications have grown so much at Countrywide Home Loans that the company has run out of room in its downtown office to seat all of its loan officers.

Last month, 24 mortgage companies recorded a total of 2,170 transactions worth $433.9 million. A year ago, they recorded 1,239 transactions with a value of $245.1 million.

"These are good times. We're excitingly busy," said Carl Cunningham, mortgage banking sales manager at Bank of Hawaii, the Islands' biggest mortgage lender. "What's the saying? Lower the rates and they will come."

Bank of Hawaii already had added nine loan officers to its nine loan centers statewide. But Cunningham was in Kona last week trying to recruit four more, which would give him a staff of 31 loan officers.

The boom in business is being fueled by the lowest interest rates in three decades. They're driving Hawai'i's record real-estate sales in which more single-family homes were sold in the first half of this year than in all of 1995 or 1996. In May, the median price for a single-family home on O'ahu reached $360,000, which topped the median price for 1990, the last year of the Japanese-led investment bubble.

Overall, the National Association of Realtors is forecasting that 2002 will be the best year ever, with 5.4 million home sales, up from last year's record of 5.3 million.

The Federal Reserve has kept long-term rates down as the national economy sputters and the stock market continues its volatile ways. And many mortgage lenders in Hawai'i don't expect the Fed to significantly raise rates in the next few months.

Many borrowers in the meantime are increasingly shopping for the best rates; even more are trying to lock in rates before the percentages jump again as they did in May and June.

Joe Goldcamp had already refinanced his home near the beach in Kailua several years ago. His 15-year, 6.75 percent rate was good. But he went for a new 6 percent, 15-year rate that carried no points and reduced his minimum monthly payment.

Even with $1,700 in closing costs, Goldcamp figures the lower rate "will pay for itself very quickly. My monthly payment will be substantially lower."

Some borrowers are finding that the typical 30-day approval period is being extended to 45 days because lenders are so busy. But Goldcamp had already been doing business with Bank of Hawaii and waited less than a month.

"It actually went very quickly, very smoothly," Goldcamp said.

Mortgage lenders say they don't see business slowing down anytime soon.

"Heck, I don't know what's going to happen next," said Russell Miyashiro, senior vice president at Finance Factors Ltd. "I do know that there's been a surge throughout our industry in the state. Everyone I speak to is jammed with all of the loans we've been processing."

The boom is under way on the Mainland as well. But unlike the Mainland, where 15-year, fixed rates are gaining interest, Hawai'i's financially conservative mortgage market still prefers 30-year, fixed mortgages for both refinancing and home purchases.

The popular 30-year, fixed mortgages are generally evenly divided between home buyers and people looking to refinance, although some lenders see differences. Loans for home sales make up 60 percent of the business at Wells Fargo Home Mortgage of Hawaii, said president Marie Imanaka. And purchases are up 88 percent, she said.

The boom is partly because of people building up equity in their homes and looking for a bigger house, Imanaka said.

"Where someone may have bought a $300,000 house at 8 percent interest," she said, "today with interest rates so low you can buy a lot more house and have the same monthly payment."

For those who want to refinance, the sub-6 percent rates for 15-year loans mean they often can pay off their 30-year mortgages in half the time with no increase in payments.

"People looking to refinance are either trying to reduce their debt or shorten their term or get out of a riskier loan," Imanaka said.

Lenders, for their part, are generally understaffed but happily overworked, Lau said.

"This has been going on for a year, but more so in the last two or three months," he said. "Some are thinking about hiring temps to fill the immediate help but most of them are paying overtime. They've got people working on the weekends and all."

In the usually busy month of July, Countrywide Home Loans had 375 loan applications just in its retail lending group. In a typical July, "we'd see half of that, maybe 70 percent of that," said Jon Whittington, Countrywide's Hawai'i manager.

Countrywide's Maui office is expanding and it will open a new Pearl City operation in October. But in the downtown office, some of the 25 people processing loans have to take turns using computers and telephones.

"We physically can't fit in any more people to do the work," Whittington said. "It's actually hurt us. We've got plenty of loans, and we could get more out of the door if only we had more people."

Reach Dan Nakaso at 525-8085 or dnakaso@honoluluadvertiser.com.