Mortgage lending growth sign of improving housing market
by Patrick McCreless
Oct 09, 2013 | 2711 views |  0 comments | 45 45 recommendations | email to a friend | print
For the last several years, the weak economy and local housing market kept the local Farmers & Merchants Bank out of the home mortgage business.

That is no longer the case.

The bank recently launched a mortgage division, helping residents obtain long-term fixed interest rate and adjustable rate home mortgage loans, to capitalize on what administrators there see as improvement in the local housing market this year. With some other local banks seeing demand grow for their mortgage services and area real estate agents selling more homes in recent months, the area housing market appears to be in a steady trend of improvement, housing industry experts say.

Larry Deason, president of Farmers & Merchants, which has locations in Anniston, Oxford, Jacksonville and Piedmont, said his bank has wanted to enter the mortgage industry for several years, but kept deciding against it due to the sluggish housing market and economy. Through the mortgage division, Farmers & Merchants will help customers complete the application process for a home loan with an outside loan agency.

The housing market crashed in 2008 as part of the Great Recession, resulting in massive numbers of home foreclosures and depressed housing sales and prices. Housing markets across the country have struggled to recover ever since.

"We wanted to wait until the economy was coming back," Deason said. "The Realtors here now are selling more houses now."

According to the Alabama Center for Real Estate, Calhoun County home sales were up about 7 percent between January and August when compared to the same period last year. Also, county August home sales increased 26.6 percent compared to those sold in July.

“I think it's a good time to get into the mortgage business,” said Everett King of ERA King Real Estate in Anniston.

King said home sales have improved considerably around the state in recent months and that he and others in the housing market expect steady sales growth over the next few years. King said there’s pent-up demand for homes now that’s driving the housing market recovery.

"There's been people who have been waiting years to sell their house," King said. "Prices are increasing ... interest rates are continuing to rise ... that's creating an urgency to buy."

Unlike Farmers & Merchants, Cheaha Bank in Oxford has had a mortgage department for about 10 years, said Alan Easterwood, mortgage officer for Cheaha. Easterwood said his department has seen growth in the consumer home market in recent months.

“We specialize in primary residence and investment housing ... we've seen an uptick in the purchase market,” Easterwood said.

Easterwood said Cheaha expanded the department from two to four employees last year to better cope with anticipated housing market growth.

"And I believe we will see continued growth in purchasing — people are gaining confidence in the economy as a whole and are gaining more confidence in their jobs," Easterwood said.

Leonard Zumpano, professor of finance at the University of Alabama and the chair of real estate economics for the Alabama Association of Realtors, said many banks offer some kind of mortgage service. Zumpano said such bank services are seeing gains due to improvements in the housing market. However, he noted that mortgage lending could face problems if the federal government shutdown continues for an extended period. The government shut down last week due to Congress' failure to agree on a budget, resulting in furloughs for thousands of federal employees, including many who work in Veterans Affairs and the Federal Housing Administration, both of which offer home mortgages.

"The only thing that has me concerned right now is that it's taking longer to process loans," Zumpano said.

Mark Vitner, senior economist for Wells Fargo, said he expects continued improvement in the housing market across the country in the coming months.

"Home sales have been depressed for so long that now there is a lot of pent-up demand," Vitner said. "There has not been significant job growth this year, but I think there will be in 2014. And I see that as helping the housing market pick up even faster."

Joey Crews of Keller Williams Realty in Anniston said his company has sold between five and 10 more homes each month this year compared to the same months last year.

"This year there is a little more demand," Crews said. "I think consumer confidence is getting better."

After the spending the last 17 years renting, Cephus Cannon recently bought a one-story home in Jacksonville, closing the deal in August.

"I wanted something to leave to my granddaughter and I just felt like it was the right time to buy," Cannon said of the home purchase.

Cannon said that while his mortgage payments are higher than what his rent payments were, he's made up for it by gaining a few hundred feet of space and a front yard.

"It was very reasonable," he said. "It's an excellent time to buy right now."

Staff Writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.

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