Nearly three out of every four loan applications taken over the Mortgage Marvel on-loan shopping website last year were for refinancing.
But just the opposite was true in Nevada, one of the states hit hardest by the housing downturn, where only one in five applications was a refinance.
The wide range between states like Nevada and Arizona, where just 28.5 percent of loan apps were for refinancings, “really surprised” Rick Allen, chief operating officer of the Mequon, Wisc.-based Mortgage Marvel.
“If you had asked me, I might have said the split was 40-60 percent, refinancing to purchase,” said Allen. “But 30-70 really blew me away.”
The main reason for such a wide range between Nevada and Arizona and states like Connecticut and Rhode Island, where 68.5 percent and 66.5 percent, respectively, of the applications taken by the website last year were for refinancing, is that owners in the harder hit states have lost equity. “Often all of it,” said Allen. So refinancing is a significant challenge.
At the same time, with housing prices tumbling, investors and other buyers are taking advantage of the low prices, so the ratio of purchase apps to refi apps is “dramatically higher.”
That's not always the case, though. Some places on the list of the 10 states with the lowest percentage of refi applications have relatively strong housing markets. But those markets are being bolstered by new jobs in such sectors as oil, manufacturing and services. And as a result, Allen pointed out, more homes are being bought.
In North Dakota, for example, just a third of the apps were for refinancing, whereas two-thirds were for purchase money loans. And in Oklahoma, 34.8 percent were refis, while 64.9 percent were for purchase loans.
Mortgage Marvel's data is based on the nearly 520,000 loan applications taken in 2011 by Mortgagebot, the company that operates the website. There is no information on the number of applications that actually closed.
Another interesting tidbit: The total refinancing percentage was higher in both 2010 and 2011 than any other year ever, yet the total mortgage volume last year was just a third of what it was in 2003 – $1.2 trillion in 2011 vs. $3.8 trillion in ‘03. And that, said Allen, “shows just how much the markets have been hit by the poor economy.”
