ABA Banking Journal - May 2011 - (Page 44)

survey & trends | by micheal mazur 15-year mortgages on the rise The demand for 15-year fixedrate mortgages as a percentage of a about the mortgage market in 2011 bank’s portfolio continued to grow in 2010, according to a new survey by the ABA. The regulatory burden & compliance costs The 18th annual ABA Real Estate Lending Survey, which was Falling home prices & the drop in appraisal values completed in February, had 174 banks nationwide participate with almost all (98%) having assets under $10 billion. Because of this representation, the survey is not Continued high unemployment & sidelined buyers meant to be a complete overview of the banking real estate market, nor is it meant to be a guide to where this housing market is heading. But A rising interest-rate environment it does provide interesting findings as many banks continue to grapple with the continuing problems plaguing the housing market. More foreclosures & increasing housing inventory One key finding is that the 15-year fixed-rate mortgage has seen an increase in demand from 17.2% in 2009 to 23% in 2010, while the 30-year fixed-rate has dropped as a total percentage of a bank’s A noticeable trend in the 2009 portfolio from 58% in 2009 to 48% in 2010. This increase in demand for survey concerned the tightening 15-year fixed-rates could be due to buyers taking advantage of the lower of underwriting standards for 1-4 interest rates they typically carry. family loans as measured by higher The survey also looked at the portion of refinancings among loans origiFICO scores. The survey did note nated. For 2010, 66% of loans produced were refinancing compared to 57% some evidence of tighter underin 2008. Last year may have been the high water mark for refinancings, howwriting in 2010 due to a growing ever, as indicated by the decline in 2011 as interest rates have crept higher. number of banks requiring higher The ABA Real Estate Survey looks at both residential and commercial loan-to-value ratios, but also found trends, and this year’s survey notes a growing percentage of banks seeing that the percentage of FICO scores higher commercial real estate delinquencies, with the largest concentration below 680 has risen. By contrast, being in construction and land development loans. This was to be expected in the previous year’s survey, the in 2010 as the Federal Reserve reported CRE delinquency rates for all compercentage of 1-4 family mortgage mercial banks being as high as 8.74% (seasonally adjusted) in the second loans that fell in the 720 and above quarter of 2010. That said, the worst of it may be over as delinquency rates FICO category grew in 2009. dropped to 7.97% for the last quarter of 2010. Regarding 1-4 family mortgages, among survey participants, average delinMichael Mazur is senior manager in ABA’s quency rates grew to 2.08% in 2010 from 1.75% in 2009 while average foreBenchmarking and Survey Research Group. closure rates grew to 0.90% from 0.68% in 2009. mmazur@aba.com 5 biggest concerns 1. 2. 3. 4. 5. 44  |  ABA BANKING JOURNAL  |  May 2011

Table of Contents for the Digital Edition of ABA Banking Journal - May 2011

ABA Banking Journal - May 2011
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking: Getting in on the Prepaid Wave
Pass the Aspirin
Tech Topics
Cover Story: #5 and Feeling Good
Smartphones Alter Banking Landscape
Compliance Clinic
Compliance Inbox
ABA Resources
Surveys & Trends
Board Matters
First Person

ABA Banking Journal - May 2011

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