Originations of loans to buy homes fell nationwide in the first quarter of 1995, according to a recent study.
The sharpest decline was in New Mexico with a 26.7% drop, while the national average was 17.5%, according to TRW Redi Property Data, Riverside, Calif. The smallest drop, 2.3%, was in Connecticut.
New Mexico faced a sharp decline because it is coming down from sharp population growth over the past few years, said Nima Nattagh, an analyst at TRW Redi. New England, including Connecticut, did not face large changes in its population or homebuying patterns, he said.
Lenders in many states benefited from the last of the refinance boom in the first quarter of 1994. Connecticut was still facing a sluggish economy, from which it has yet to recover. Because lending in Connecticut never picked up as it did elsewhere at the beginning of last year, lending levels did not have far to drop when rates went up in early 1995 and originations declined.
"An improvement in interest rates does not necessarily translate into people going out to buy houses," said Richard Brynildsen, executive vice president at Centerbank Mortgage Co., Waterbury, Conn.
Large numbers of layoffs in the defense and insurance industries in Connecticut have kept people's confidence in the economy low, Mr. Brynildsen said.
A lender in Roswell, N.M., said there has been a shortage of medium- priced housing in her market, making it difficult for interested borrowers to buy a home in their price range.
Ross T. Stenhouse, vice president at First National Bank in Albuquerque, said while purchase originations in Bernalillo County were down 15% in the first quarter of 1995, the economy there is relatively strong.
"In 1994 there was a lot of major plant expansions" in the area, he said, fueling the home purchase market. Expansions have leveled off in 1995.
"The economy here is strong," Mr. Stenhouse said, "just not as robust as 1994."