Page 17 - BusinessWest January 23, 2023
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interest-rate environment has made some potential borrowers skit- tish, Worden said it’s important to note that those rates are still historically low — yes, a fixed 30-year mortgage rate is north of 5% right now, but a generation ago, it was 17% or higher.
“I think it’s a mental thing with borrowers,” he went on. “Rates were so low for an extended time, you get used to that mentally, and it’s hard to readjust when they start going up again.”
Still, Sosik said, the housing market remains strong due to the fundamentals of low inventory levels and those still relatively low interest rates. But especially with remote work taking hold, “people who may be inclined to think about moving may not want to give up their 3% mortgage.’
“And there’s not a flow of new inventory, so we have this inter- esting dynamic where rates are rising, but it’s not impacting home prices materially,” he added — especially for a class of higher- income cash buyers who aren’t interest-sensitive.
“There’s a lot of liquidity in the economy, a lot of it funneled toward the residential market,” he said. “Volume is still good, but inventory is still low. Everything is still working; it’s just more expensive to borrow.”
Scully said Country continues to see significant loan demand early in 2023 — “not at the level of 2022, but we are seeing good pockets of business on the commercial side.” Meanwhile, to help customers purchase homes, the bank kicked off a homebuyers’ pro- gram in the fall featuring no money down and no private mortgage insurance in select areas.
“We’re still seeing a decent residential market, not as robust as it had been, but still decent,” he said. “On the commercial side, we’re still looking at some interesting deals. But everyone is holding their breath when it comes to construction lending for large projects.”
That said, investors are seeing positive signs, he added, includ- ing a comeback for retail and hospitality. “The restaurant industry is starting to have workers come back.”
Meanwhile, Scully added, “unemployment is still pretty low, and we’re not hearing much of layoffs, so hopefully we’ll see the Fed reach its level, see that interest-rate changes have impacted infla- tion, and we may be starting to see the other side of this sometime
in 2023.”
Worden said no one really knows where the economy will turn,
though there are hopeful signs. “As we see inflation numbers com- ing down, we’ll start to get an idea whether what the Fed is doing is starting to work. And maybe they’ll start pulling back on rate increases. If they can pull off that soft landing, we might see people reinvesting in business, buying equipment, buying new properties. But I think everyone is waiting a little bit.
“When you have a good economy, banks do well; people are out investing, buying, selling, doing things,” he added. “When the econo- my is bad, banks struggle because no one’s out doing anything.”
Community Counts
The higher-than-usual heating costs that impact every homeown- er affect bank employees as well, Scully said, which is why Country recently gave a $750 stipend to all its employees to mitigate those impacts, and other inflationary pressures.
But Country isn’t taking its focus off the community at large, recently adopting the tagline “made to make a difference,” which applies not only to customers and business clients, but to the com- munity as well, where the bank has focused much philanthropic energy over the years to needs like healthcare and food security. In 2022, the bank donated close to $1.3 million, a year after donat- ing a total of $1 million to two major food banks on top of its other giving.
Scully said the pandemic shed a spotlight on basic human needs, not only for banks, but their employees, who, at least in Country’s case, have been more engaged in recent years.
“We learned a lot about ourselves and humanity during the pan- demic, and we have a lot of staff members who really flourished in the sense of being able to volunteer and give time to the commu- nity,” he explained. “This what our brand us all about.”
Worden said Western Mass. is fortunate to be home to numer-
“Obviously, we want to make money; that’s how we stay in business and give raises to our employees and hire new employees. But when Western Mass. does well, we all do well.”
 ous locally owned banks that are active in their communities by support-
Banks
Continued on page 38
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