Page 31 - Flathead Beacon // 2.25.15

FLATHEADBEACON.COM
BUSINESS MONTHLY
FEBRUARY 25, 2015 | 31
CONTINUED FROM PAGE 29
So for the economy to sit as it does, recovering with the Fed rate still at near zero, plenty of consumers are taking advantage, Nystuen said. The low rates translate to inexpensive borrowing from financial institutions, and in 2014 Glacier Bank had its best year for con- struction loans since the recession.
“It’s been a long four or five years to kind of work our way through the down- turn,” Nystuen said. “But 2014 was the best year we’ve had since 2008 or 2009.”
Last year showed a stabilizing con- struction market, with all of the mu- nicipalities in Flathead County re- porting consistent if not markedly in- creased numbers of building permits for new projects.
“We’re hearing from some of our building contracting customers that they’ve got work through the rest of this year, and it’s only mid-February,” he said.
Along with construction loans, more clients are coming in for other loans, like those for new cars.
“It’s a great time with consumers to look at trading up their vehicles,” Nyst- uen said. “They’ve got more money in their pocket at the end of the month be- cause of fuel prices being lower.”
Nystuen and Eldredge said there is a degree of cautious optimism about the current economic situation, and that many consumers could take advantage of low interest rates, causing more posi- tive ripple effects.
“If [the Fed] can keep interest rates low, they can do a lot,” Eldredge said.
[email protected]
In the seven years since the recession hit the Flathead Valley, economists have used many terms to describe the financial straits and marketplace woes, from “dire” to “rock bottom.”
Now, with the economy continuing to gain momentum and unemployment rates nearing their pre-recession levels, the descriptors reflect the change: “cau- tious optimism” and “sweet spot.”
By the end of 2014, Montana’s unem- ployment rate was at 4.2 percent, while the U.S. rate hit 5.6 percent. In Flathead County, 2014 ended with 6.2 percent unemployment, higher than both the state and national stats, but still bet- ter than the early part of 2010, when the county sat around 12 and 13 per- cent unemployment.
A rebounding economy means more people are working, and due to the rela- tive stability, people are feeling freer to spend their money again and take on projects or purchases they may have been waiting on.
Historically low interest rates are helping make these financial decisions possible. The Federal Reserve has kept interest rates at near zero for six years in an attempt to revive the national econo- my and bolster employment.
Now that the nation seems to be re- covering, there has been talk of the Fed increasing interest rates. At the end of January, Janet Yellen, chair of the Fed- eral Reserve, said rates would not in- crease before June, if at all.
Residential construction at Silverbrook Estates north of Kalispell. BEACON FILE PHOTO
However, dropping oil prices have contributed to tempering inflation, ac- cording to Brad Eldredge, the executive director of institutional research, as- sessment, and planning at Flathead Val- ley Community College, so there’s less need to increase interest rates.
“With the declining oil prices, I think it’s allowing them to keep inter- est rates lower for longer, which is really good; it’s really good for the economy in general,” Eldredge said. “People can borrow money inexpensively and put that money to work.”
The interest rate on a 30-year mort- gage in January was 3.67 percent, accord- ing to The Federal Home Loan Mortgage Corporation, known as Freddie Mac. It’s
an astonishingly low rate, said Bob Nyst- uen, president of Glacier Bank.
Now that property values are bouncing back, Nystuen said his bank is seeing more clients refinancing their mortgages.
“They’re feeling a little bit more se- cure in their future,” he said. “They’re using the cash to build a deck or get rid of consumer debt, and take advantag- es of low rates.”
Before the recession hit in 2008, in- terest rates for 30-year fixed-rate mort- gages were double what they are now, at about 6.5 percent. At the beginning of the decade, the rates were at 7 and 8 percent, and went as high as 17.5 per- cent in the 1980s.
free
Fat Bike February
call for reservations!
one free rental
per person
406.257.5808 www.wheatonscycle.com
214 1st Ave. West, Kalispell Montana