Independent Banker - January 2022 - 30

PORTFOLIO
Commercial real estate transaction volume
Actual Forecast
$617
$586
$537
$464
Plot area
$316
$264
$158
$73
2009 2010 2011
2012
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Sources: 2001-2020 Real Capital Analytics, 2021-2023, UU Real Estate Economic Forecast.
*Indicated directions (}~=) refer to the current forecast relative to the previous UU Real Estate Economic Forecast. The previous UU Real Estate Economic Forecast (released in May 2021) projected
$500B for 2021, $550B for 2022 and $590B for 2023
$383
$500
$453
$600
$515
20-year avg. ($347)
$600
$600
our existing customers, although
we're always trying to pick up new
customers, " says Joseph Lutter, chief
credit officer at Heartland State Bank.
" For most ag borrowers, it's probably
going to be similar to 2021, because
they are still taking advantage of the
extra funds that have been pushed out
by the government. "
Residential boom slows
Looking at residential mortgages,
the market is expected to remain
strong in 2022. However, origination
volumes are pulling back from recordhigh
levels generated in 2020 and
2021 at $4.5 trillion and $4.3 trillion,
respectively. Residential mortgage
originations are forecast to slow
to $3.3 trillion in 2022, according
to September 2021's Fannie Mae
Housing Forecast. Volume from home
purchases is expected to tick higher
to $1.9 trillion, while refinancing is
expected to drop from $2.5 trillion in
2021 to $1.3 trillion in 2022.
" The activity still seems to be there,
but our expectation is that we will
revert back to more historical levels in
2022, " says Dill. " With interest rates
still being low, people are trying to
find that right opportunity, and that
will help keep that volume steady. "
The Citizens National Bank in
Concordia, Kan., saw an increase in
lending volume in 2021, largely due
to the surge in demand for mortgages
both in new homes and borrower
refinancing, says Ashley Hutchinson,
an assistant vice president at the
$215 million-asset bank. Similar to
the Fannie Mae forecast, Citizens
National Bank is anticipating less
mortgage activity in the coming year.
" What we're seeing in terms of things
slowing down is just a lack of supply, "
Hutchinson says, adding that there is
a shortage of homes for people to buy,
and that lack of supply also extends to
other consumer loan-driven products,
such as cars and trucks.
The Citizens National Bank also is
an active ag lender. Hutchinson notes
that one of the factors likely to affect ag
lending in the coming year is increasing
input costs, such as the cost of seed
and fertilizer.
" We will see what shakes out for [this]
year [in ag], but we are seeing input
costs increase. So, there is a need for
additional lending products. "
-ASHLEY HUTCHINSON, THE CITIZENS NATIONAL BANK
Ag is so much more dependent on the
economic conditions, " she says. " We
will see what shakes out for [this] year,
but we are seeing input costs increase.
So, there is a need for additional
lending products. " Citizens has added
more easy-to-use crop input lines of
credit so that customers can use one
30 Q ICBA Independent Banker Q January 2022
Billions of dollars

Independent Banker - January 2022

Table of Contents for the Digital Edition of Independent Banker - January 2022