Rising interest rates and price appreciation are slowing mortgage originations in Las Vegas, but a growing percentage of homeowners here are bucking the national trend by refinancing their homes and getting home equity lines of credit, according to a research firm.
California-based ATTOM Data Solutions reported that Las Vegas had 11,660 originations to buy single-family homes and condos during the second quarter. That is flat from the 11,596 in the second quarter of 2018, the same as nationwide numbers that show a less than 1 percent gain.
“The rising mortgage rates this year are having a chilling effect on the housing market and demand,” said Daren Blomquist, senior vice president at ATTOM. “That’s the slowest growth we have seen (in Las Vegas) going back to the fourth quarter of 2013, when there was a slight decrease on the purchase side when we saw a spike in mortgage rates.”
Mosi Gatling, sales manager with Loan Depot, a mortgage banker, said the rising interest rates are making it harder for people to qualify, especially first-time homebuyers. The interest rates surpassed 5 percent for the first time since the downturn of the market in October 2008, when rates were 6.5 percent, she said.
Those with a 740 credit score or higher and doing a down payment of 5 percent will get a rate about 4.875 percent, Gatling said. Someone with a credit score in the mid-600s can get a rate of 5.375 percent with a 5 percent down payment.
Twelve months ago, rates were about 1.25 percentage points lower but started accelerating in the past four months with the Federal Reserve raising the federal funds rate three times in 2018, she said.
On a $250,000 mortgage, people with good credit would pay $165 more a month, Gatling said.
“People trying to buy homes are running into problems because it’s cutting into their affordability,” Gatling said. “There are others who might be able to afford it but are second-guessing should they go forward.”
Sean Hulsey, the mortgage retail market manager with Wells Fargo, said he expects originations to dip in the fourth quarter of 2018 and first quarter of 2019 before picking back up because rates are still low by historic standards.
“We are trying to work the referrals we have and reach out to past and existing customers to get through the next two quarters,” Hulsey said. “We are expecting the business to pick up steadily in the second quarter of next year when you will see the housing market trend up again. That will come into play with the spring homebuying season. It is normal during this time of year for the market to slow down, but with rising rates and uncertainty in the political environment, you are going to see a lot of people on the sideline to watch what happens.”
What will help Las Vegas originations is people relocating here for jobs who won’t be deterred from buying in a market that has lower home prices than where they currently live, Hulsey said. Three or four out of 10 people are seeking mortgages…