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VOL. 127 | NO. 183 | Wednesday, September 19, 2012

Local Mortgage Market Up 22 Percent

By Andy Meek

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It’s been an old story for several quarters – for a few years now, in fact: Rates are low, and homebuyers keep tiptoeing back into the market.

That’s especially liable to be the case going forward, in light of the Federal Reserve’s steps last week to keep interest rates low for an indefinite period of time. Indeed, the local mortgage market continues to feel the effects of those low rates.

Total mortgage volume throughout Shelby County was up 22 percent over August 2011, climbing to almost $127 million in August 2012 from $104.4 million during the same period last year, according to real estate information company Chandler Reports, www.chandlerreports.com.

Similarly, there were more mortgages made last month – 845, up from 672 in August 2011. However, the average mortgage amount dropped to $150,169 last month from $155,372 in August 2011.

That overall trend also corresponds to the pattern of home sales during the month, when August saw the eighth consecutive monthly increase over 2011. Shelby County saw 1,487 home sales last month compared to the 1,228 homes sold in August 2011, according to Chandler.

Scott Stafford, president and CEO at Evolve Bank and Trust, said Evolve is continuing to see increased activity in the purchase market.

“To date, the price range has been from $150,000 to $250,000,” Stafford said. “However, we are now seeing increased activity in the higher priced homes ranging from $300,000 to $450,000. The home affordability index is at its highest point since World War I. As a result, more buyers are entering the market.

“Notwithstanding, with 30-year conventional mortgages priced at 3.5 percent and 15-year conventional mortgages priced at 2.75 percent, homeowners continue to refinance. Many homeowners are converting 30-year mortgages to 15-year mortgages, and with rates as low as they are currently, changes to mortgage payments are mostly negligible.”

The uptick, meanwhile, hasn’t been entirely uninterrupted. August’s mortgage totals, for example, were down a little from July despite being above the year-earlier totals.

Between July and August, total mortgage volume fell from almost $143 million to almost $127 million. The number of mortgages went to 845 in August from 827 in July, and the average mortgage amount fell from $172,365 in July to $150,169 in August.

Some of the largest Memphis-based banks reported mortgage increases over the two August periods. First Tennessee Bank’s August 2012 mortgage volume, according to the Chandler numbers, was up 513 percent over August 2011 (from $550,240 to $3.3 million). Magna Bank’s volume during that same period was up 8 percent (from $10.4 million to $11.3 million). Independent Bank’s mortgage volume, however, dropped from $87,050 in August 2011 to $26,000 in August 2012, according to the Chandler numbers.

The Federal Reserve, in a new report about its regional district that includes Memphis, noted it believes the area “continued to expand” modestly during July and early August. The report went on to say residential real estate market conditions in the local area have continued to improve moderately.

And home sales increased throughout most of the area on a year-over-year basis, according to the Fed.

In a recent commentary distributed to clients, Mei Li – an economic analyst with FTN Financial, a division of First Tennessee Bank – wrote that in September, the 30-year mortgage rate reached a new low of 3.51 percent. She went on to say that properties are less expensive, are appealing to buyers, and last month almost all the major homebuilders experienced significant increases in stock price.

Chandler Reports is a division of The Daily News Publishing Co. Inc.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 75 255 11,693
MORTGAGES 72 295 15,274
FORECLOSURE NOTICES 3 71 2,982
BUILDING PERMITS 198 590 27,844
BANKRUPTCIES 62 280 11,242
BUSINESS LICENSES 35 98 4,136
UTILITY CONNECTIONS 94 516 17,000
MARRIAGE LICENSES 18 80 3,544

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