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VOL. 126 | NO. 72 | Wednesday, April 13, 2011

Lenders See Mortgage Counts Drop

By Andy Meek

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As far as mortgage activity is concerned, the local housing market was still stuck in reverse during the first quarter of 2011.

Total purchase mortgage activity in Shelby County between Jan. 1 and March 31 was down about 10 percent when compared to Q1 2010, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com (Data for this report included purchase mortgages only, not refinances.)

The total dollar amount fell to almost $205 million in Q1 this year from almost $229 million during Q1 2010.

The average mortgage amount budged only slightly between the two quarterly periods, slipping to $144,242 in Q1 2011 from $146,151 in Q1 2010.

But the number of new mortgages dropped more noticeably in the first three months of 2011 when compared to the same period in 2010.

Banks and lenders made only 1,420 mortgages in Q1, a 9.2 percent drop from 1,564 mortgages in Q1 2010.

That trend is in line with other housing activity for the early months of 2011 in Shelby County, which also saw a 14 percent decline in home sales and a 29 percent drop in permit totals, according to the most recent Chandler Reports data.

Despite the drop-off, lenders remain confident that the market will improve along with the weather.

“Homebuying demand in Shelby County was soft in the first quarter, but we have seen a sharp increase in purchase application volume as we enter the spring home-buying season,” said David Umsted, vice president of Merchants and Planters Bank Home Loans in Memphis.

This year’s first quarter numbers also represent a sizable shrinkage from the previous quarter, Q4 2010.

Last quarter marked declines from Q4 2010’s mortgage total of 1,591 and dollar volume of about $238 million.

The trend in mortgage activity is not a phenomenon limited to Shelby County. The national Mortgage Bankers Association, for example, showed a drop in mortgage applications in a survey released last week.

Mortgage applications slipped 2 percent from one week earlier, according to data from the association’s Weekly Mortgage Applications Survey for the week ending April 1.

Of the three lenders responsible for the largest individual amounts of mortgage activity in Shelby County during Q1 2011 (Community Mortgage Corp., Magna Bank and Wells Fargo Ltd.) only Wells saw a spike in mortgage activity over Q1 2010.

Wells made 84 mortgages last quarter with a total volume of $14.5 million, up from 75 mortgages in Q1 2010 with a total volume of $13.8 million.

Community Mortgage Corp.’s number of mortgages slipped to 166 from 232 in Q1 2010, and Magna’s dropped to 98 from 119 during the same period.

Magna stressed the general weakness in the housing market throughout the past year in the bank’s recently released annual report for 2010.

“It is of particular significance that our overall volume declined in a year (2010) in which refinance activity increased,” the report reads.

“This pattern demonstrates the weakness in home sales despite record low mortgage rates.”

Jeff Kuehn, president of Evolve Mortgage, struck an optimistic note in forecasting what will happen as the rest of 2011 unfolds. Barring any future shocks like more Middle East unrest, surprising spikes in oil prices and uncertainty related to the upcoming debt ceiling vote in Congress, he said the economy has started to catch its breath of late.

That’s translated into some great deals on homes – where buyers who can acquire the financing have the desire to do so.

“We do mortgages basically all over the country these days, and we’re seeing the same thing pretty much in most locations,” Kuehn said. “There’s a few isolated pockets that are still having difficulty. But we’re seeing a lot more purchase activity now. A lot more clients are coming to us to get pre-qualified.”

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

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 57 280 1,209
MORTGAGES 55 244 916
FORECLOSURE NOTICES 8 52 151
BUILDING PERMITS 158 699 2,751
BANKRUPTCIES 37 157 618
BUSINESS LICENSES 12 77 276
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0