Mortgage lending in 2014 hit lowest level in a decade

Crain's Chicago Business reports:

Chicago-area homeowners took out the fewest new mortgages last year in at least 10 years, according to data being released today by DePaul University's Institute of Housing Studies.

Mirroring national trends reported earlier, the IHS study shows that "mortgage credit is still tight, and people aren't borrowing," said Geoff Smith, the institute's director. The slowdown in mortgages "is a headwind that's going to hold back a broader recovery," he said.

The number of home sales, which runs hand-in-hand with mortgage lending, has been increasing from the bottom but has not recovered to boom-years levels.

IHS found that there were 8.1 new mortgages for every 100 homes in the Chicago area. That compares to more than 25 mortgages per 100 homes in 2005 and 2006, years when "everybody was borrowing, whether they needed to or not," Smith said. (The figure is not a percentage; some homes may have more than one mortgage.)

The figure dropped to 9.7 mortgages per 100 homes in 2011 before spiking to 12.6 the next year, thanks in large part to "very low interest rates that spurred a lot of refinancing activity," Smith said.

The 2014 figure, 8.1 mortgages per 100 houses, was a drop of more than three percentage points from 11.2 per 100 in 2013, demonstrating the impact of higher interest rates.

Yet, house flipping was profitable in the Chicago area!