Residential lending steadies, commercial stays slow

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The biggest benefit of last fall’s Troubled Asset Recovery Program was that financial companies like Countrywide, Bank of America, Citigroup and Wells Fargo increased their quarterly residential mortgage business by $134 million, according to the Treasury Department.

Even monthly loan originations jumped.

Mortgages, home equity lines of credit and other consumer loans increased during March, but increases in both mortgages and other consumer loans remained lower than February’s totals.

The trend appears to be trickling into the Pikes Peak region as well.

During March, El Paso and Teller counties saw single family home sales volume increase by 25 percent from March to April and condominium sales rose about half a percent. As a result, new mortgage activity represents close to 50 percent of overall residential lending, up from 40 percent earlier this year.   

The news wasn’t as positive from commercial mortgage companies or from purchasers of mortgage-backed securities.
The commercial real estate sector saw continued poor market conditions in March along with general caution by businesses. While commercial loan balances at the 21 banks were up slightly, banks reported that demand for such loans remained well below normal levels, as businesses are focusing on strengthening their balance sheets, reserving for future losses and downsizing.

In addition, this general lower level of demand for new loans reflected a growing surplus of vacant space in the market, as firms have downsized and office buildings sit empty.

Under TARP, the top 21 recipients of Treasury investments covered by the Capital Purchase Program reported $311.5 billion in mortgage originations during the first quarter, according to the U.S. Treasury.

Funding of new mortgages, home equity lines of credit and soared from $177.9 billion in the fourth quarter.

Volume included $298.1 billion in first-mortgage production and $13.2 billion in home-equity, line-of-credit activity.