Banner Bank aims to boost Oregon housing market with low-rate mortgages

Mar 03, 2009 (The Bulletin - McClatchy-Tribune Information Services via COMTEX) -- FRE | Quote | Chart | News | PowerRating -- A Walla Walla, Wash.-based bank that has received government money is hoping to jump-start the Northwest housing market, including Bend's and Redmond's, by offering traditional 30-year fixed mortgages with interest rates as low as 3.875 percent.

Banner Bank, through its Portland-based subsidiary, Community Financial Corp., is offering the unprecedented low rates -- Freddie Mac lists the current national average for a 30-year fixed loan at 5.07 percent -- primarily to help builders it has financed build and sell homes, said Community Financial President John Satterberg.

"We won't make money on the loans, but we're going to get the economy turned around," Satterberg said.

At a time when many banks are being criticized for sitting on the money they received through the government's Capital Purchase Program, which was one part of the Troubled Asset Relief Program passed last fall, Banner Bank says it is lending, which was one of the government's primary goals for the program.

"Our goal is to sell our houses and start building more and that is going to help" a lot, said Satterberg. "The quickest way to fix the economy is to build houses."

Satterberg said he's also hopeful the initiative -- called The Great Northwest Home Rush -- will help stem another growing problem: comparable home sales.

Satterberg said home sales have dropped so much it is hard for appraisers to find three comparable home sales to set a home's value, which is a requirement for most traditional loan programs.

Satterberg hopes Banner's program will end up helping all homeowners who are trying to sell or refinance a mortgage by generating sales of homes offered by builders that Banner financed, thus creating comps for others nearby.

Banner Bank's low 3.875 percent rate is contingent upon a down payment of 20 percent or more, a credit score for the borrower of 700 or better and other income qualifications. The rates climb a bit if those conditions aren't met but remain lower than what the market currently supports, Satterberg said.

The low rates will only be available for a select number of homes. In Bend, those include two homes in the neighboring Northcrest and Southcrest subdivisions built by The Hollman Co. in north Bend, townhomes at Pahlisch Home's Deschutes Landing subdivision along the Deschutes River, and one home in the Pronghorn Resort, according to the bank.

In Redmond, there are eight homes available, including homes in the Megan Park and Vista Meadows subdivisions.

"We're very excited," said Dennis Pahlisch, president of Pahlisch Homes, about Banner Bank's new low mortgage interest rate program. "We think it's an interest rate that should get some people off the fence."

Builder Gerald Veenker, who owns the Wilsonville-based Hollman Co., said Banner Bank is getting to the root of the nation's current economic problem: unsold homes and a lack of lending.

"The amazing thing is of all the banks around, they appear to be the only ones doing it," Veenker said.

A number of Northwest banks have received funds from the government's Capital Purchase Program, including Portland-based Capital Pacific Bancorp, Medford-based PremierWest Bancorp, Portland-based Umpqua Holdings, Spokane, Wash.-based Sterling Financial Corp., and Seattle-based Washington Federal Savings.

Cascade Bancorp, the Bend-based parent of Bank of the Cascades, has applied for funds from the Capital Purchase Program.

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