INSIGHT ON: Banking & Credit Unions – Unlocking doors

Posted on Jul 1, 2013 :: Banking & Credit Union Trends , Insight On
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Posted by , Insight on Business Staff Writer

Mortgage lending looking up; first-time home buyers ready to invest

More prospective home buyers are looking forward to putting out the welcome mat, thanks to nearly two years of continued growth in the mortgage lending market.

According to the Wisconsin Realtors Association (WRA), existing home sales nationwide are up by around 10 percent on average from last year, and the local news is even better.

“What’s great for Wisconsin is (April) is the 22nd straight month that we’ve noticed increases,” says Ann Spencer, regional mortgage director at Green Bay’s Associated Bank. “So the trajectory is certainly going in the right direction.”

Lenders in the Fox Valley say they’re also seeing attractive loan rates spark a growing interest in home ownership.

“The first-time home buyers are a strong market,” says Drew Bodway, assistant vice president-mortgage manager at First National Bank, Fox Valley. “They seem to be more anxious to jump into the long-term investment of homeownership instead of writing out that monthly rent check each month.”

While the momentum is on the upswing, lenders point out the market hasn’t made a complete rebound compared to where it was five or six years ago.

“Although we’re moving in the right direction, the average sales price is really not keeping up to the increase of percentage for the number of home sales,” Spencer says.

Data from WRA shows Wisconsin’s median sales price for a home in 2013 is $134,000. In 2007 that number was $163,000, representing a 27 percent decrease in sales price over a six-year period.

Although home buyers aren’t spending as much as they were a few years ago, Bodway says the current lending climate is helping them get more home for their money.

“People are conservative, but with the low-rate market, they are able to get a little more for their dollar today,” he says.

Stricter lending guidelines may also account for lower purchase prices. Whereas six years ago a home buyer could finance 100 percent of a new home purchase at some banks, today a minimum down payment of 3 percent is required by law – something lenders say is a positive step in the right direction.

“We’ve always taken a common-sense approach to lending, while still protecting our customers’ investment,” Spencer says.

A CLOSER LOOK

Existing Home Sales April 2013 vs. April 2012

Wisconsin – up 9.2 percent

Nationwide – up 10 percent on average

Source: Wisconsin Realtors Association