Foreclosures not as big a problem in Hawaii

Home loan foreclosures are at an all-time high -- one of every 200 mortgages ended that way in the first quarter -- but Hawaii is more likely to be affected through weakened tourism than by large numbers of local homeowners going into foreclosure.

Subprime mortgages were nine times more likely to enter foreclosure than regular home loans, the Mortgage Bankers Association reports. While one homeowner in 20 is late, the deliquency rate among subprime borrowers is one in six. In Hawaii, though, subprimes are far less common than on the Mainland, Honolulu Board of Realtors economist Harvey Shapiro and Bank of Hawaii economist Paul Brewbaker confirmed.

Hawaii is more likely to be affected through slower tourism, since Mainland residents who are late with mortgage payments aren't likely to undertake an expensive Hawaii vacation. California and Arizona, among the greatest sources of Hawaii visitor traffic, are among states contributing heavily to the national delinquency statistics.

"The rate of delinquencies is being driven by what is taking place in seven states," said Doug Duncan, chief economist of the association. "The percentage of loans in foreclosure would be well below the average of the last 10 years were it not for Ohio, Michigan and Indiana, and the rate of foreclosures started nationwide would have fallen were it not for the big jumps in California, Florida, Nevada and Arizona."

Bank of Hawaii and First Hawaiian Bank are both now quoting 6.375 percent for a 30-year fixed-rate mortgage.

Bankoh wants 1.625 points and its annual percentage rate after adding all points and fees is 6.532 percent. This based on borrowing not more than $625,500 with a minimum 20 percent downpayment. Bankoh offers a lower rate for 2.25 points and a lower rate for qualified borrowers of higher amounts.

First Hawaiian wants 1.875 points and its APR is 6.6 percent under the same terms described above. Both of Hawaii's two biggest banks updated their online quotes on Friday. In both cases, these terms work out to monthly payments above $600 for every $100,000 borrowed.

Foreclosure isn't the only current trend. The Wharton School of Business reports that while many borrowers went into arrears in the first quarter, there was also a trend of people refinancing adjustable loans as fixed-rate loans, switching to a fixed rate before the current rise in interest rates.

The National Association of Realtors separately said Thursday that the national median home price may fall this year, adding that if it does, it will be the first time since the Great Depression. But it's a different story in Hawaii, where most homes have held on to most of their peak value and some are still appreciating.

In California, where several markets have seen home prices fall significantly, visitor traffic to Hawaii is down from peak levels. Overall domestic traffic to Hawaii leveled off this spring and is down from year-before levels this month. As of Friday, domestic visitor traffic for June thus far is down from last year by about 2 percent.

Reach Howard Dicus at hdicus@bizjournals.com

 

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