According to the latest Bankers Economic Index, sponsored by the Wisconsin Bankers Association (WBA), demand for residential mortgages is low in most parts of the state and will likely stay that way until the housing market recovers in 12 to 18 months.
For the index, 132 Wisconsin bank CEOs participated in the survey. Of the group, 41 percent predict it will take 18 months for the state’s housing market to recover and 30 percent predict it will take 12 months. Also, 60 percent of the bankers say residential loan demand will be flat through the first six months of this year, 31 percent say mortgage demand will drop further and only 16 percent said demand will rise.
Also, in a separate announcement, Doug Duncan, the Mortgage Bankers Association’s chief economist and senior vice president for research and business development, said Tuesday, "We expect housing starts and home sales to continue to trend down and reach bottom around the end of the third quarter 2008."
Bankers are seeing more customers having trouble making mortgage payments. Of those surveyed by the WBA, 48 percent said foreclosures increased during the past six months and 49 percent said past dues for residential mortgage payments also increased.
Of the bankers surveyed, 53 percent said the overall Wisconsin economy is "good" and 45 percent said it is "fair." Most, 65 percent, do not think the state’s economy will weaken further during the first six months of the year. And, 55 percent say the state will not be in a recession in 2008, while 35 percent said they were "unsure."
"Wisconsin bank CEOs seem to believe that growth in other business sectors like manufacturing, agriculture and tourism will help offset the housing drag in 2008," said Kurt Bauer, WBA president and CEO. "However, bankers remain concerned about the adverse impact of high oil prices on the economy and report weakening commercial loan demand, most likely because of the trickle effect from the housing slowdown."
