Lending in Massachusetts increased across all categories last year as the commonwealth continued its climb out of the economic doldrums. Well, in all but one category, of course: That would be residential refinances, second mortgages, equity loans and home equity lines of credit.
If you’re surprised, that’s because you haven’t been paying attention.
“I think we all knew that at some point, two things were going to happen: if rates stayed the same, everyone who could refinance would have refinanced,” said Jay Tuli, vice president of corporate development and retail banking at Leader Bank. “And the second scenario was that rates would go up. Both have sort of happened at the same time. The refinance market has really dropped off a cliff.”
As an example, Leader Bank made 5,516 refinance loans worth about $1.7 billion in 2012. Contrast that with last year, when the Arlington-based bank did just 2,928 such loans worth $972 million.
The only category in which mega-banks consistently topped regional and community banks in both number and volume of loans last year was the refinance category. Regional and community banks seem content to let their multibillion dollar competitors have the dwindling refinance business, though. They’ve been busy gearing up for the purchase market.
Last year, Leader Bank did 1,073 single-family purchase-money mortgage loans for a total of about $391.1 million, up from 820 loans totaling $279.8 million the previous year. The bank also did 509 conventional purchase-money mortgages for condos totaling $149.1 million. That puts Leader Bank on footing with megabank Wells Fargo – and well ahead of other big banks like Bank of America and RBS Citizens.
Community and regional banks continued their march into the Top Lenders in Massachusetts last year, with Leader Bank, Cape Cod Five Cents Bank, Berkshire Bank, Sage Bank, and Bank of Canton competing with megabanks for single-family and condo mortgages in the Bay State.
The makeup of top commercial and retail mortgage lenders differed slightly, but offered a similar picture to residential lending. Smaller and regional banks based in Massachusetts largely beat out giant out-of-town contenders like TD Bank and Bank of America.
Rockland Trust Co. and Eastern Bank topped the list of bank lenders in that category, making 204 loans totaling $208 million and 163 loans totaling $198.6 million, respectively.
Mortgage companies also saw their numbers and volume of loans increase last year in conventional purchase-money mortgages for single-family homes, condos, multi-family homes and jumbo mortgages. Refinance business also declined. Borrowers seeking commercial and retail or industrial and manufacturing mortgages apparently preferred banks, and sometimes credit unions, for those types of loan, which is consistent with the previous year.
Credit unions also held their own in the purchase market last year, though the makeup of 2013’s top lenders in the credit union category changed little from 2012.
And while credit unions might not fit the typical profile of a jumbo mortgage lender, this year’s list included a few newcomers in the jumbo mortgage category, notably Align Credit Union in Lowell, Crescent Credit Union in Brockton, Industrial Credit Union in Boston, and Connexus Credit Union.
Meanwhile…
The picture looks a little bit different in Western Massachusetts, which has not experienced quite the resurgence in building and buying that the Greater Boston area has. Pittsfield-based Berkshire Bank increased its share of the purchase market – from 600 single-family mortgage loans worth $173 million in 2012 to 743 such loans worth $227 million last year – but Kevin J. Inkley, Berkshire’s senior vice president of mortgage lending and loan servicing, said that the bank’s highest concentration of mortgage loans is inside the 495 beltway.
Berkshire’s May 2012 acquisition of Needham-based Greenpark Mortgage Corp. boosted its market share in the Greater Boston Area, bestowing upon the bank the endorsement of the Massachusetts Teachers Association, and Inkley said the bank hired six new mortgage lenders last year and has already hired eight more this year.
Expect to see more recruiting in mortgage lending divisions at Massachusetts banks this year, in anticipation of a heady spring purchase market.
Tuli said Leader Bank had hired eight new mortgage lenders last year and another seven this year, and he’s not particularly concerned about the qualified mortgage rule because “our business never really fell outside the QM box.”
Now he’s just waiting for the weather to clear.
“I think we’re all thinking here that the spring market coming up, once this weather gets better, it’s going be a very, very busy spring purchase market and we’re geared up for that."
Email: lalix@thewarrengroup.com
