Independent Banker - January 2025 - 19

" There's been some pent-up
demand, as people locked in really
low rates over the last few years, " says
Crowley, " so as rates have come down
for mortgages, you're starting to see
for-sale inventories and sales activity
going up a little bit. "
According to the latest Fannie Mae
Housing Forecast, as of November
2024, single-family mortgage
originations for new home purchases
are expected to increase from
$1.3 trillion in 2024 to $1.4 trillion in
2025. Refi activity also is projected to
rise from $351 billion to $527 billion.
" We're already starting to see people
come in and look to refi and lock for
lower, " Prejean says. " The question is,
where's the bottom? You hate to do it
at 6.25% when rates might dip to the
fives in a few months. "
Whereas the 30-year fixed mortgage
rate averaged 6.8% in 2023, Fannie
Mae forecasts that the 30-year rate
will drop to 6.4% by the end of 2025.
Construction rebound?
Commercial and multifamily
developers that shelved construction
projects due to soaring costs are once
again looking to move forward. " We've
had fairly good lift in lending over the
last three months, " notes Don Coffin,
president and CEO of $7 billion-asset
Bankers Trust in Des Moines, Iowa.
Deals are coming back, he adds, in
part because inflation and increases
in construction costs have leveled off,
and because developers have adapted
to the higher rate environment and are
finding ways to keep doing business.
Total construction starts rose
4% in October to a seasonally
adjusted annual rate of $1.2 trillion,
according to Dodge Construction
Network. For the 12 months ending
October 2024, total residential starts
were up 6%, while nonresidential
starts were down 1%.
However, lenders are continuing
" [The lending outlook is] a bit of a
mixed picture. I do expect things
to begin improving, but it's hard
to know right now what that pace
of improvement will look like. "
-TODD CROWLEY, ANB BANK
to watch what happens to the wave
of CRE loan maturities. According to
S&P Global Market Intelligence, there
is an estimated $1 trillion in CRE and
multifamily debt maturing in 2025.
The need to refinance those
maturing loans will create both
challenges and opportunities for
lenders. Can the business handle that
new rate, and did banks underwrite
to account for a higher rate?
Tighter market liquidity could be an
opportunity for those banks that have
good loan books and a capacity to
lend, and refinancing loans at higher
rates will allow banks to increase their
net interest margin.
" 2025 and 2026 will be big years
for banks refinancing CRE term
debt originated in 2020 and 2021
when rates were low and activity was
robust, " Coffin says. " This makes
sound underwriting in a higher-rate
environment critical for financial
instructions and borrowers alike. " He
adds that this imperative applies to all
lending categories.
Consumers and the economy
Consumers continue to have an
appetite to spend and assume more
debt in the process.
According to the New York Fed,
total household debt increased by
$147 billion to reach $17.94 trillion
in Q3 2024. Although delinquencies
overall remained low at 1.59%, credit
card delinquency more than 90 days
The lending outlook
in figures
Total construction starts:
ye +4%
$1T
in CRE and multifamily debt
maturing in 2025
Source: S&P Global Market Intelligence
V $1.4T
ar over year to
October 2024
Source: Dodge Construction Network
alue of single-family
mortgage originations
predicted for 2025, up slightly
from $1.3T in 2024
Source: Fannie Mae Housing Forecast
Incr 40%
ease in volume of new
ag operating loans in the
year to Q3 2024
Source: Q3 2024 Survey of Terms of Lending to Farmers
independentbanker.org // 19
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Independent Banker - January 2025

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