Mainebiz

V O L . X X V I I I N O. X X V I I I B A N K I N G / F I N A N C E / I N S U R A N C E A s interest rates rise and the hous- ing frenzy of the past two years cools down, the banking indus- try is seeing impacts related to fewer people applying for mortgages and loss of fee and interest revenue. But bankers say other revenue sources make up for losses and provide growth opportunities. In late October, the Federal Home Loan Mortgage Corp. (OTCQB: FMCC), or Freddie Mac, reported the 30-year fixed-rate mortgage broke 7% for the first time since 2002 and is more than double the rate a year ago. e 15-year fixed-rate mortgage averaged 6.36%, com- pared with 2.37% a year ago. e five-year adjustable-rate mortgage averaged 5.96%, compared with 2.56% a year ago. State and national Realtor associa- tions say sales are easing, although prices continue to climb. We asked three bankers for their take on the evolving scenario. A shift from the 'refi' market Laura Johnson is director of mortgage and consumer lending at Bangor Savings Bank. Mainebiz: What are you seeing for mortgage activity now versus a year ago? Laura Johnson: e housing market is slowing down. Interest rates are at the highest we've seen in nearly 20 years — sitting at approximately 7%. is has caused refinance application volumes to decrease 80% [nationally] from this time last year, because most borrowers already locked into a lower rate, and don't want to refinance at a higher rate. ere is still strong buyer demand even with the higher interest rates, in part driven by increased rental rates over the past year. For instance, if you are in an apartment that saw a 10% increase in rent, it may motivate you to consider buying a home. More recently, at Bangor Savings Bank we've seen an uptick in adjust- able rate mortgages. Last year, ARMs were few. At the beginning of this year, ARMs were approximately 5% of our overall dollar volume. In October, they are 40% of our monthly volume and that is a 64% increase quarter-over- quarter, or 19% of our overall mortgage volume year-to-date. However, the combined volume of our fixed and ARMs has decreased by approximately 38.5% year-to-date through September. P H O T O / F R E D F I E L D Laura Johnson, director of mortgage and consumer lending at Bangor Savings Bank, says there's still strong buyer demand even with the higher interest rates. F O C U S N OV E M B E R 2 8 , 2 0 2 2 16 Post-mortgage boom, banks find other growth opportunities B y L a u r i e S c h r e i b e r Spiking interest rates

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