|
NEWS RELEASE 2008
ABA Media Contact: Jim Eberle
(202) 663-5477
E-mail: jeberle@aba.com
ABA REAL ESTATE LENDING SURVEY FINDS COMMUNITY BANKS MILDLY OPTIMISTIC ABOUT 2008
WASHINGTON, D.C., Feb. 21- Despite the turmoil in the housing market and the prospect for a recession, the nation's community banks were mildly optimistic about their ability to increase mortgage lending this year, according to the American Bankers Association's 15th annual Real Estate Lending Survey.
Some 39 percent of survey participants predicted in October and November an increase in their single-family lending in 2008 -- the same level of optimism expressed the year before -- and another 39 percent said lending volume would remain the same.
The report cautioned that the optimism expressed by respondents may be waning today because of the slowing economy, and that the sentiments expressed vary considerably across the country and even within metropolitan areas in some states.
"This forecast is consistent with the often expressed view that community banks are well positioned to gain market share as other lenders falter," said Robert R. Davis, ABA executive vice president for housing finance and risk management.
"Community banks were largely focused on prime lending (much of it conforming loans) and were not involved in making the types of subprime loans that are leading the way to the large delinquencies and foreclosures," he added.
More optimism than pessimism was also expressed in the areas of commercial real estate, multi-family, home equity and reverse mortgage lending. Survey participants forecast a decrease only in construction lending.
According to the survey, the vast majority of home mortgage originations (84 percent) in 2007 were made through a community bank's retail facilities, 12 percent originated from brokers or correspondents and 3 percent came from the Internet.
Banks participating in the survey held 68.5 percent of their loans in portfolio, with the remainder sold into the secondary market.
For the fourth year in a row, banks sold more of their home loans, as a percent of originations, to aggregators or conduits (14.6 percent) than to the government sponsored enterprises. Other sales were to Freddie Mac (7.6 percent), Fannie Mae (3.9 percent), the Federal Home Loan Banks (1.8 percent) and other financial institutions (3.4 percent).
The most often used conduits were identified by survey participants as Countrywide, Taylor, Bean & Whitaker, CitiMortgage, Wells Fargo, and SunTrust.
Among community banks surveyed, fixed-rate loans accounted for 76.2 percent of loan production, up significantly from 64.7 percent the previous year. Among adjustable-rate loans, hybrid 5/1 loans remained the most popular product, accounting for 9.6 percent of originations, down from 14.6 percent the year before. Interest-only loans held steady at 2 percent of originations.
ABA's Total Business Solutions mortgage program continued in 2007 to help member banks of all sizes participate in the secondary market. Since the program began in 2001, participants have delivered more than $80 billion in mortgages.
The survey was compiled from responses by 248 community banks. It was conducted in the fourth quarter of 2007, with information from Jan. 1-Sept. 30, 2007. The report is available at /aba/documents/News/RELsurvey.pdf
The American Bankers Association brings together banks of all sizes and charters into one association. ABA works to enhance the competitiveness of the nation's banking industry and strengthen America¡¯s economy and communities. Its members ¨C the majority of which are banks with less than $125 million in assets ¨C represent over 95 percent of the industry¡¯s $12.7 trillion in assets and employ over 2 million men and women.
# # #
| 
