Mortgage rates in Greater Cincinnati have reached their lowest level in about 18 months, good news for potential home-buyers.

        The average 30-year, fixed-rate mortgage was 7.85 percent as of last Tuesday, down from 8.01 percent a year ago, according to a weekly survey of 26 lenders by the Cincinnati Area Board of Realtors.

        The last time the rate was that low was July 5, 1999, when it hit 7.83 percent. Rates have been volatile most of the year before beginning to fall steadily since mid-July.

        The lower rate is good news for consumers because it makes housing affordability greater and financing less costly.

        For example, the monthly payment on a 30-year, fixed-rate mortgage with 7.85 percent rate is $723.33. That same mortgage carried a monthly payment of $783.13 in late May, when the rate locally hit its highest level this year at 8.70 percent.

        Higher rates have hurt the housing and mortgage-lending industries this year as many potential borrowers backed off. Much of that slowdown was caused by the Federal Reserve Board's raising rates six times since June 1999 to slow the economy and curb inflation.
       

Industry skeptical
about credit law
               A new law that was supposed to make it easier for small community banks to get credit from a federally chartered banking agency could have the opposite effect, industry representatives say.

        They say a plan to restructure how the Federal Home Loan Bank System is partially capitalized would require banks and thrifts that are members of that system to start paying taxes on stock transactions with that agency that are now tax-exempt.

        Industry officials also told the Federal Housing Finance Board that its move could force each of the 12 regional Home Banks to reserve more credit cover advances. They say such a move could make it more costly for member institutions to borrow money and possibly force some of those institutions to leave the system.

        The proposal, if it stands, could be felt locally as the Federal Home Loan Bank of Cincinnati is among the 12 regional agencies.

        The Finance Board is to OK the final version of the capital plan Dec. 20, leaving industry officials a short time to protest. Industry observers told the American Banker that the board will try to pass the rule — spurred by the Gramm-Leach Bliley Act and now two weeks late — before the next president is sworn in.

        The proposal is significant because home loan banks provide advances and financing to community banks and thrifts to help fund various ventures, particularly things like housing projects.

        The Federal Home Loan Bank of Cincinnati says it is working to ensure continued favorable tax status and easy access to its below-market rate funds for advances.

        The FHLB of Cincinnati is privately owned and operated group that represents 750 community lenders in Ohio, Kentucky and Tennessee. So far this year, the agency has provided $32 billion in advances to members.
       

Provident expands
unit in Florida
               Hoping to boost deposits and fee income by targeting rich individuals, Provident Bank is beefing up in the Sunshine State.

        The Cincinnati-based bank is aggressively increasing the size of its private retail banking unit based in Sarasota, Fla., one of the nation's most lucrative banking markets with its concentration of wealthy retirees and “snowbirds” who visit during the winter.

        Provident has attracted executives from national banking companies like Bank of America and PNC Bank to target Florida clients with assets of $500,000 to $10 million to sell them financial services.

        Provident plans eventually to open similar units for the affluent in Tampa and Naples.

        The company's private client unit offers several services, including mortgage and brokerage services, custom credit and estate planning and trust services. Provident will generates fee income by charging for the services.

        David McShane, senior vice president and managing director of Provident's private client group in Florida, said the unit's focus is to meet demands of affluent customers. He previously was a senior vice president at Bank of America.

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