Alaska Economic Update (Part 4)

Home lending activity flat - The Alaska Housing Finance Corporation (AHFC) released its third quarter report on Alaska housing indicators. It tracks new loan activity for single family homes and condominiums in Alaska. The data is based on a survey representing approximately 95% of mortgage lenders in Alaska and also includes AHFC loans. The survey covered mortgage lending activity in the first nine months of 2015.

It reported 6,511 loans were originated statewide for single family homes and condominiums for a total amount of $1.77 billion. This is a slight decrease in volume relative to the first 9 months of 2014. Loans were done with an average down payment of 11% for the last five years. Single family homes accounted for 88% of statewide mortgage lending activity with 49% of those loans occurring in Anchorage. The Mat-Su contributed 18% of the volume, 10% in Fairbanks, 8% in Kenai, 5% Juneau, 2% Kodiak, and 1% in Ketchikan.

Refinance activity slowed rapidly in 2014 and has leveled off this year - 30 year conventional fixed interest rate mortgage loans have been getting less expensive for three decades. In 1981 they peaked at 16.6% and have undergone a slow and steady decline ever since. In early 2009 rates dipped under 5% on average for the first time and a surge in refinance activity began.

Housing statistics still good relative to the U.S. – The recently released survey by the Mortgage Bankers Association shows that Alaska continues to have some of the lowest levels of foreclosures and delinquencies on residential mortgage loans in the United States. At the end of 2015, Alaska ranked 4th and 2nd best in the nation out of 50 states in foreclosures and delinquencies of all home loan types.

Subprime lending to traditionally non-qualified borrowers was a large contributing factor to the national mortgage problems. The survey covers 93,384 mortgages in Alaska. 5,829 or 6.2% were considered subprime, compared to 7.2% nationally. The rate of delinquencies and foreclosures on subprime loans is significantly higher. However, Alaska is in a far better position and has the lowest level of foreclosures and delinquencies for this important category. Subprime foreclosures in Alaska are at 1.7% while the national average is 7.8%. Alaska’s subprime delinquency rate is 6.3% compared to the national average of 16.2%. State across the country, including Alaska, have shown steady improvements in reducing the subprime problems over the last five years.