by Keith Wiley, Research Associate at the Housing Assistance Council

Rural mortgage markets continue to struggle in the aftermath of the national housing crisis.

The number of home loans in rural areas declined by 14.1% between 2012 and 2013, according to the most recent Home Mortgage Disclosure Act (HMDA) data. The drop-off in lending is largely related to refinance activity. Gradually increasing interest rates and tighter underwriting criteria have slowed mortgage refinancing nationally, as well as in rural communities. Refinance lending in rural and small town communities declined by 23% in 2013 from 2012 levels.

Rural home purchase lending, on the other hand, increased by 2.3% from 2012. After reaching a 10-year low in 2011, rural home purchase loans increased for the past two years to 440,489 in 2013.

While these trends suggest an improvement in home sales, rural and small town home purchase loans remain 52% below the pre-recession levels of 2006. Home purchase loans continue to make up a smaller portion (35%) compared to refinance loans (57%) of all rural lending activity.

Read the full story at The Daily Yonder