Both commercial and residential mortgage lending fell in January from the same month last year, signaling a prolonged real estate slump for Shelby County to start off 2008.
Residential lending declined 17.3 percent in the county from January 2007 to January 2008 as the number of mortgage loans fell from 1,251 to 1,035, according to the most recent residential lender analysis by real estate information company Chandler Reports, www.chandlerreports.com.
Also, the average mortgage amount decreased from $148,193 to $146,995 from January 2007 to January 2008, and the total dollar amount for residential mortgages dropped from $185.4 million to $112.5 million.
Despite the decline, the number of mortgage filings did increase from December 2007. And mortgage bankers reported more applications in their offices during January thanks primarily to a short refinancing boom in the middle of the month, which came in response to a couple of days of extremely low interest rates.
For example, in the week ending Jan. 25, the national Mortgage Bankers Association's (MBA) Refinance Index increased 22.1 percent, while the refinancing share of mortgage activity increased to 73 percent of total applications, up from 66 percent the previous week.
At the same time, the Conventional Purchase Index had decreased 18.9 percent, a sign that fewer people are buying homes, yet one that made that refinancing jump even more welcome.
"In January, we had a huge spike in application volume," said Greg Ellenburg, district manager at First Tennessee Home Loans and secretary-treasurer for the Memphis Mortgage Bankers Association. "Now, about 50 percent of that came from refinance activity, but we had a huge spike. Our February is tracking not quite as strong as January did, but it's very close. So we've seen activity elevate."
Top of the heap
As for the top lenders in the area, Wells Fargo Ltd. issued more loans in January 2008 than any other single lender, with 70 residential mortgage loans averaging $170,269 for a total of $11.9 million. That total amount also was tops in the county.
Wells Fargo was followed in the number of loans and total dollar amount categories by Countrywide Home Loans with 57 loans averaging $167,741 for a total of $9.6 million, and First Tennessee Bank NA with 48 loans averaging $160,185 for a total of $7.7 million.
The top five for dollar amount was rounded out by SunTrust Mortgage Inc., with 42 loans totaling $7.1 million, and Cordova-based Community Mortgage Corp., with 45 loans totaling $6.8 million.
The commercial lending side was more of a mixed bag for January. While mortgages increased 35 percent from January 2007 to January 2008 in Shelby County, the total dollar amount and average mortgage amount dropped sharply, according to Chandler Reports' most recent Commercial Lender Analysis.
Lenders issued 50 commercial mortgages in January 2008, compared to just 37 in January 2007. But the total dollar amount was only $88.4 million compared to $792.5 million a year ago, and the average
mortgage amount was only $1.8 million this year compared to $21.4 million a year ago.
The top individual commercial lender for January 2008 in terms of number of mortgages was SunTrust Bank, which issued six mortgages totaling $9.4 million.
SunTrust was followed by First Tennessee Bank NA with five mortgages totaling $3.5 million, and Regions Bank (doing business as Regions Mortgage) with three mortgages totaling $14.8 million.
Wells Fargo Ltd. led the way in total dollar amount with $16 million on just two mortgages.
On the rebound
Where does the mortgage industry go from here? Will residential and commercial lending activity increase as it usually does when springtime rolls around? That's anybody's guess - and next month's Chandler data will reveal the answers.
But those in the industry remain upbeat especially as it concerns the local real estate market, which has received more positive outlooks from prognosticators. Business 2.0 Magazine, for example, ranked Memphis No. 6 among cities expected to "bounce back" from the housing crisis.
Ellenburg said he and an appraiser discussed the local real estate landscape the other day and they agreed that Tennessee should indeed rebound quicker than some other markets, especially those on the coasts.
"He thinks we'll rebound within the next six months in the county - not necessarily in the beltline of the city, but outside the beltline," Ellenburg said. "He thinks the oversupply is being taken care of. I think the same thing. I think we're about six months away - outside the beltline."
As for the inside of the beltline (the Interstate 240 loop), Ellenburg said he believes it will be a different story, one with some twists and turns to sort out before the happy ending.
"You've got some oversupply, some bankruptcy issues, some foreclosure issues that are going on," he said, "and that's
going to drive the supply up a little bit longer."