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VOL. 127 | NO. 118 | Monday, June 18, 2012

County’s Mortgage Lending Up in May

By Andy Meek

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When bank customers are seen doing something seemingly as simple as making plans for the future – plans, of course, that involve spending money – that conveys a lot to someone like Mike Edwards, Paragon Bank’s president and chief operating officer.

It helps gauge loan demand, for example, as well as the health of the local marketplace, the ability of borrowers to handle and take on new debt, and more.

“Right now, our loan demand is better. Our pipelines are better,” Edwards said. “One area of our company doing very well right now is mortgage.”

That’s evidenced by the fact Paragon’s total mortgage volume for May was up a whopping 94 percent over May 2011 ($1.34 million, up from a little more than $691,000 in May 2011).

Total mortgage volume throughout Shelby County also was up – by almost 35 percent over May 2011, climbing from $86.6 million to a little more than $117 million, according to real estate information company Chandler Reports, www.chandlerreports.com.

There were more mortgages made during the month – 792, up from the 601 in May 2011. The average mortgage amount was up, too, climbing from $144,158 in May 2011 to $148,758 last month.

“We’re seeing customers exhibit more confidence and talk about plans, though they’re still cautious,” Edwards said. “So we’re optimistic about the future and about Paragon and are working hard and aggressively to make sure we’re taking advantage of opportunities.”

The top five local lenders for April were Community Mortgage Corp., Magna Bank, Patriot Bank, Iberiabank and BancorpSouth. They collectively accounted for almost 40 percent of the month’s total volume.

The county’s mortgage market also rose a bit from April to May. There were 608 mortgages made during April, which then rose to May’s 792, and total mortgage volume in May was up from a little more than $90 million in April.

Changing views to look at the story less from a Shelby County perspective and more of an industry perspective and a case-by-case perspective, the outlook is not as positive. Multiple lenders cut back on their volume during May, such as Bank of America, Fidelity National Bank, Nationstar Mortgage and Synovus Mortgage Corp.

Bank of America’s local mortgage volume dropped from a little more than $2.3 million in May 2011 to about $922,000 during May 2012.

“The level of interest rates remains historically low as we transition into a low-rate, flat-curve environment that is unfavorable for bank stocks,” Wunderlich Securities Inc. bank analyst Kevin Reynolds wrote in his most recent sector snapshot for clients. “From an operating perspective, earnings growth and improving profitability becomes increasingly difficult in a low-rate, flat-curve environment, which could feed the growing negative sentiment towards the banking sector.”

Likewise, Michael Drury, chief economist at McVean Trading & Investment, said at The Daily News’ recent “Money & Markets” seminar that many banks still would rather take a very small return from holding safe assets when they can’t see a good investment alternative, like lending that money out to consumers.

Be that as it may, Community Mortgage Corp. was the most active local lender in May, with a volume of a little more than $15 million. That’s about 34 percent more mortgage volume activity than Community Mortgage saw in May 2011.

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

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 124 481 17,865
MORTGAGES 127 530 20,565
FORECLOSURE NOTICES 4 48 2,693
BUILDING PERMITS 195 891 36,836
BANKRUPTCIES 52 262 11,426
BUSINESS LICENSES 24 139 5,848
UTILITY CONNECTIONS 26 116 6,830
MARRIAGE LICENSES 26 133 4,049