Mortgage Activity Slows in February

By Andy Meek

Mortgage activity in Shelby County began 2013 by shifting into a higher gear, but someone tapped the brakes in February.

Total mortgage volume countywide had started the year showing double-digit percentage growth over the same period one year earlier. But in February, volume was up just 1 percent over the same month in 2012.

Mortgage volume climbed to a little more than $63 million in February from $62.7 million the same month a year ago, according to real estate information company Chandler Reports,

Despite that barely perceptible uptick in volume, there were actually 15 percent fewer mortgages last month (404) than February 2012 (473). But the average mortgage amount rose to $156,544 last month from $132,649 in February 2012.

As with the drop-off in actual mortgages year over year, there also were fewer mortgages made in February than in January (624). Meanwhile, all that mortgage activity basically is in line with the pattern in the county’s broader housing market, which saw stagnant new home permits in February versus one year earlier as well as a decrease in home sales.

Shelby County homebuilders filed 70 permits in February according to Chandler, versus 72 permits filed in February 2012.

Builders sold 39 new homes in February, compared with 43 sales in February 2012.

David Umsted, vice president and mortgage loan officer with Merchants and Planters Bank Home Loans, said the trend his bank is seeing reflects a slight decrease in refinance loan demand locally but a corresponding increase in purchase loans.

“Housing inventory seems to be low in certain segments of Shelby County, so we are seeing buyers get off the fence,” he said. “I have seen multiple competing offer situations with buyers we are arranging financing for. There has also been a slight shift away from FHA loans and more buyers are choosing conventional loans.

“FHA is raising their mortgage insurance premium once again on case numbers ordered on or after April 1. We will see additional changes with the FHA lending program in June that will continue to push qualified borrowers towards conventional loans.”

A newly released report from the Federal Reserve Bank of St. Louis gives more clarity into the economic picture in the Memphis area. The Fed’s latest Burgundy Book shows that home prices across the area were “fairly flat, noticeably less than the nation’s 7.1 percent increase.”

Also, loan delinquency rates for banks in the Memphis area were similar to other U.S. peer banks, though there was healthy improvement in asset quality reported by Arkansas and Tennessee banks. The Fed report goes on to note that, for the most part, bankers in the area continued to see soft loan demand.

Related to local mortgage activity, the results at some of the largest Memphis-based banks reflect a mixed bag. First Tennessee Bank’s February mortgage volume, for example, was almost $1.7 million, up from $961,230 in February 2012.

At the same time, Independent Bank’s mortgage volume fell during that period (to $403,300 from almost $1.2 million). And Magna Bank’s volume also fell, to about $4.3 million from $5.8 million. Community Mortgage Corp. led the way during February in terms of mortgage volume. Its February volume was $7.9 million, almost unchanged from $8 million in February 2012.

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