With rates on 30-year and 15-year mortgages dipping in mid-November, combined with quarterly state total home sales at the second-highest pace ever, mortgage lenders had plenty to celebrate at Thanksgiving.
During the third quarter, Mississippi reported a sales rate of 71,700 units of single-family homes and condominiums, up 7.7% from the previous year, with resale activity accounting for a lion’s share of the market, according to the National Association of Realtors.
“When you consider that last year was a record for Mississippi, with 64,200 sales, it’s remarkable that the sales pace this year has been stronger,” said an NAR spokesperson. “The first three quarters, sales rates are above that, so Mississippi should easily set another record.”
Mississippi outpaced the South, which saw sales rise 5.6% during the same time frame and was the best-performing region of the country.
“The new buzz words in the mortgage industry for this area are 100% loans and 80/20s, even though the interest rate for those products is a little bit higher,” said Norma Owings, senior loan officer for First Trust Bank for Savings in Southaven. “That’s what most everybody calling in is asking for. Lot of times, we’ll show them products with a cheaper rate and they’ll like that lower payment. For people who are only going to be here for a couple of years, a 100% loan works great.”
For a 30-year, $150,000 mortgage, interest rates for a standard conforming conventional loan have been averaging 5.5% with a 1% origination fee and no points. FHA or VA government loans have been averaging 5.38% with a 1% origination fee and no points. One hundred percent loans have been averaging 6.125% with a 1% origination fee and no points, said Owings.
“This market has exploded in DeSoto County,” she said. “If anybody had told me 30 years ago that we’d see this kind of growth, I’d have told them they’d lost their mind. I’m in the last little pocket of country life in DeSoto County. If I-69 doesn’t get me, then Star Landing Road’s going to get me. I told my husband that if that happens, next time we’ll move so far out into the boondocks they’re going to have to pump in sunshine.”
Sharon Rice, senior vice president of Dryades Mortgage in Gulfport, said homebuyers along the Mississippi Gulf Coast are also inquiring about 100% financing programs, 80/20 or 70/30 financing programs to avoid paying PMI, and interest-only products fixed for three-, five- and seven-year terms.
“We’ve been seeing more interest in products out of the ordinary,” she said. “We’re still doing conventional FHA and VA loans. Typically, to be competitive in our market, we quote zero (percent origination fee) and zero (points).”
Construction loans are running about a point over prime, said Tracey Ladner, owner of Coastal Mortgage Group in D’Iberville.
Linwood Nooe, president of Executive Mortgage Corporation in Ridgeland, said first-time homebuyers are taking advantage of gift programs available for FHA loans, where the seller, through a non-profit organization, provides the 3% down payment.
“Mississippi Home Corp. (MHC) has a first-time bond issue out,” said Nooe. “Historically, MHC has provided, through the mortgage revenue bond program, a way for the buyer to not have to make the 3% down payment. For the first time, they have now an option where the borrower obtains funds from MHC, but if the borrower is able to make his own 3% down payment, he gets a further reduction in the interest rate. As rates go up, that program will become very popular.”
Most homebuyers in metro Jackson are opting for fixed-rate mortgage loans, especially since adjustable rates are beginning to ease up, said Nooe.
“Most people who have benefited from adjustable rates are now locking in fixed rates,” he said. “We’re also seeing people that are able to refinance. While they may only reduce their interest rate a small amount, they’re able to do away with PMI because their homes have gone up in value.”
Despite Realtor concerns that home sales would decline around election time (November 2), mortgage lenders have seen a higher volume of business, said Nooe.
“The presidential election really did seem to affect people who were in the process of buying a home,” he said. “They decided to go for it.”
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.