Home lenders in the Atlanta metropolitan area saw volume drop by 29% last year, as higher rates put the squeeze on originations, according to figures compiled by TRW Redi Property Data, a nationwide real estate information company.
The drop was caused by a "near collapse" in the refinancing market, according to the survey. In 1993, more than 106,000 homeowners refinanced or took second mortgages in the five-county Atlanta area. Refinancings fell off a cliff in 1994 - down by 44% to 60,000. Twenty-year lows in interest rates in 1993 led many consumers to refinance, spurring a boom in the home- lending industry.
Lenders in Atlanta paint a grim picture of contraction and brutal price competition. "In some cases, companies have seen their volume drop by as much as 80%," said Robert St. John, first vice president at Atlanta's Liberty Mortgage Corp.
"The pie has shrunk, but the buildup in lenders has not gone away. You have the same number of lenders chasing less business." As a result lenders continue to originate loans for less than their secondary market value, he said.
One bright spot has been Atlanta's healthy home-buying market.
Purchase mortgage originations were up by more than 9% between 1993 and 1994.
In Gwinett and Dekalb counties, purchase mortgages increased by 19% and 13%, respectively. Mortgages for purchases of single-family residences and condominiums accounted for 28% of overall lending in 1993, but increased to 43% by the end of 1994, according to the survey.
"There is definite strength in the first-time home buyer market," said Mr. St. John. "Fannie Mae, Freddie Mac, and the FHA have all loosened guidelines to make first-time buying more affordable. People are now qualifying who wouldn't have made it in the past."
First Union National Bank was the largest mortgage lender in Atlanta with a market share of 4.8%, followed by NationsBank of Georgia, which commanded a market share of slightly less than 3%.