Higher interest rates have created stronger demand for adjustablerate products nationwide - but not in New York.
Empire State consumers are lagging in their interest in adjustable-rate home loans. New Yorkers prefer ho-hum fixed-rate products. At least for now.
Many lenders confirm that New York State is below-average when it comes to ARMs production.
More than 80% of all residential loans made at GFC Mortgage Bankers Inc., based in New York City, are made at fixed rates, said Abraham Eisner, executive vice president.
At Green Point Savings Bank, a New York thrift, customers still prefer fixed-rate loans, according to an executive vice president.
"There are a lot of cultural differences between the East Coast and the West Coast, and this is just one example of that," said Patrick J. McEnerney, regional vice president, Bank of New York Mortgage Co.
Mr. McEnerney attributed the difference to low turnover. A.s of last year, New York State homeowers moved to new homes just once every 20 years, on average, according to Chicago Title and Trust Co. Only Maine homeowners stay put longer. In Nevada, by comparison, homeowners switch dwellings every seven years.
Mr. McEnerney said slow turnover encourages a preference for fixed-rate loans.
But James J. Beardi, president, M&T Mortgage Corp., Buffalo, said New Yorkers in only certain regions of the Empire State prefer fixed-rate loans.
In Western New York, fixedrate loans are still the rage, Mr. Beardi said. But around Albany, right in the middle of eastern New York, "ARM lending is very, very big," he said.
Mr. Eisner at GFC attributed weaker adjustable-rate loan activity on a statewide dearth of savings-and-loan institutions. He also said a few lenders like Marine Midland Mortgage dominated lending in the state, dulling competition.
Mr. Eisner said. adjustable-rate mortgages after the first year adjustment must be about 2% to 3% cheaper than fixed-rate loans in order for ARMs to become more popular. Today, spreads are only 1% to 1.25% between the loan types, he said.
But Mr. Eisner may not have checked out the Greater New York Savings Bank, Mineola. The thrift's loans now' have such spreads of 2% and climbing.
Martin J. Sasbon, a bank first vice president, said he expects adjustable-rate mortgage lending to grow more competitive.
Price also may be a factor. According to HSH Associates, a Butler, N.J., research outfit, New York lenders generally charge less for fixed-rate loans and more for adjustable-rate mortgages.
In Rochester, a midsize city in the western section of New York, 30-year, fixed-rate loans cost an average of 9.03% and no points. In Cincinnati, they go for 9.13%.
Lenders tend to think New York State will not soon become an adjustable-rate hotbed -- no matter how high are interest rates.
"It just doesn't happen that way" in New York State, said GFC's Mr. Eisner.
