Richard Ryman
The Green Bay Press Gazette
June 7, 2009
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Economic stimulus has been taking place under our noses since January, the old-fashioned way. People are refinancing mortgages in record numbers and freeing up cash for other things.
Some examples: Johnson Bank said it issued more than $1 billion in mortgage loans in Wisconsin and Arizona through the end of May. Associated Bank topped $2 billion, including more than a half-billion in May alone. And Nicolet National Bank recorded $76 million in mortgage loans through May, compared with $50 million for all of last year.
Until last week, interest rates were below 5 percent, so even homeowners with already-historically low rates benefited.
Mortgage foreclosures also continue at high levels, and many houses are refinanced at lower overall values, but the bottom line is, anyone making smaller monthly payments is better off.
Scott Fecteau, senior vice president of mortgage and consumer finance at Associated Bank in Green Bay, said Associated's customers on average are reducing loan payments by $100 a month.
"This is long term. Every month they are going to be saving," he said.
Mike Daniels, president of Nicolet National Bank, said foreclosures are still high: 434 in Brown County through May 7.
According to credit reporting agency Trans-Union, borrowers who were 60 days or more behind on their mortgage payments nationally rose to 5.22 percent for the first three months of the year, while the Mortgage Bankers Association says 12 percent of mortgage holders were past due in the first quarter.
And declining property values are a problem for some.
"The thing that's hard to get your arms around is how many people could benefit from refinancing but can't because the value of the house went down, or they're in the wrong product," Daniels said.
While refinancing might be a means to increasing other economic activity, it won't have the same effect as people getting mortgages to buy houses.
"The refinancing is all good and dandy, but when you start to see a greater level of purchases, that will be the indicator you are really headed the other way," Daniels said.
"But the refinancing is still a good thing. They are improving their financial positions, getting a better rate and lowering their monthly payments."
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