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2023 saw deposits flushed out of the banking system as individuals looked to grow their money in the stock market and families spent down savings accumulated from the pandemic. This made it hard for banks to retain deposits, and forcing them to offer high interest products to keep depositors interested.

But this year, Guilford Savings Bank  President and CEO Timothy Geelan thinks that this trend will change.

“Deposit flows will be stable in 2024 and pricing pressure will subside. GSB expects approximately 9 percent deposit growth as it continues to leverage digital tools to grow market share,” Geelan said in an email.

Banks are also looking to combining both online and physical branches this year. For NBT Bank and JPMorgan Chase executives, they see their expanding retail branch footprints as helping them build deep relationships with customers in their respective communities, bringing in deposits.

“Coming off a very successful integration with Salisbury Bank in 2023, NBT is optimistic about incremental growth opportunities for deposits given our expanded footprint, including over 150 locations in Connecticut, Maine, Massachusetts, New Hampshire, New York, Pennsylvania and Vermont,” NBT President and CEO John H. Watt Jr. said in an email.

Cynthia Frederick, Chase’s regional director for Connecticut Consumer Banking, said with the bank opening five branches in 2023 and planning to open more in six locations across the state in two years, bank staff will have new platforms to help and guide customers managing their financials and achieving their goals.

Despite the high interest rate environment, Matt McSpedon, market director for JPMorgan Chase’s Connecticut Commercial Banking, is anticipating to get more commercial lending as businesses will continue to borrow and invest this year, he said. He cited Chase’s latest Business Leaders Outlook survey where 82 percent of respondents said their credit needs will either increase or remain the same in 2024.

GSB’s Geelan also thinks more commercial lending will follow once businesses gain confidence that the economy’s trend towards a soft landing becomes more certain. He expects to see 10 percent growth in commercial lending for his bank this year.

Mortgage Market and Strategies in 2024

Since top Federal Reserve policymakers predicted they would make three rate cuts in 2024 in a survey taken before their December meeting, Connecticut bankers are expecting for residential sale transactions to pick up this year in a way that will level out the mortgage market after its struggles in 2023.

Executives from GSB, NBT and Chase are optimistic that residential mortgage lending will benefit from the Federal Reserve interest rate cuts anticipated this year. They see rates likely lowering in the latter half of the year, which will stimulate refinancing demand and provide more accessibility for people who are priced out of the market in the past year.

Ed Mainland, senior lending manager at Chase, is also hoping for housing inventory to increase modestly this year, paired with a “gradual mortgage rate decline over the next five years” which will depend on the inflation, the Federal Reserve’s policy and economic growth.

“Inventory has remained historically low and has kept home prices higher, but there are also some potentially positive trends,” Mainland said. “For instance, the number of building permits for construction of new single-family homes rose nationally every single month in 2023. Based on that trend, we may see the number single-family homes being built in 2024 increase. The added inventory, along with a gradual mortgage rate decline from current levels, can help offset higher home prices and put homeownership within reach in markets like Connecticut, where inventory and affordability challenges continue to affect potential buyers.”

Robert Monti, the second vice president at the Connecticut Mortgage Bankers Association (CMBA), agreed.

“Our projection for 2024 is flat, but we do anticipate a potential retraction in the rates second half of the year. We do anticipate, as does the national Mortgage Bankers Association, a pickup in refinances throughout the year, which again, have been few and far between in 2023 because people got really good rates, they didn’t get out of it, and I can’t really blame them,” he said.

“We envision potentially that if the rates might come down, we have a potential of seeing some refinance business coming through the door the second half of the year,” he added.

Monti said that Connecticut home buyers were able to get mortgage rates as low as 2.75 percent in the height of the pandemic, compared to the usual 3 percent to 4 percent rate in other states, which contributed to the unwillingness to refinance last year.

Given the anticipated flat market this year after a tough mortgage market in 2023, Marla Bogaert and Glenn Campbell, senior lending officers at Essex Savings Bank, said they expect their bank’s residential lending to also stay “relatively even” as there are “not a lot of deals to be had” in the areas that they service.

“There is pent-up demand from last year and now the Fed [is looking to] cut rates. Later in the first quarter or second quarter, there will be a little bit of [home buying] activity due to the spring seasonality, but we do think the activity will pick up dramatically in the second half,” Campbell, the bank’s chief lending officer, said.

Campbell said homebuyers who are unable to buy homes last year due to the high 7 percent interest rates will be able to make a decision to buy homes this year – driving a soft market activity – as the rates have so far come down to the 6 percent range.

CMBA’s Monti, who is also the senior vice president of Union Savings Bank’s residential mortgage lending team, said that the bank saw a successful 2023, surpassing its $115 million residential lending goal by 17 percent, and seeing its mortgage lending volume increase by 40 percent from 2022 to 2023, a stark contrast compared to the U.S. banking industry that saw a 27 percent decrease in mortgage volumes.

“We had a very successful year [due to] our aggressiveness with our pricing, our expansion of our brand and our footprint, and the way we created relationships that people started to use us more and got a feel of our service and how great we did with that that they kept coming back for more so to speak,” Monti said.

For Liberty Bank – the lender that had the highest number of purchase and non-purchase mortgage loans in 2023 according to data from The Warren Group, publisher of The Commercial Record – Senior Vice President and head of retail lending Matthew Cammarota said Liberty will continue to focus on lending to low and moderate income markets this year, as it did in 2023.

He said the bank will continue to expand mortgage officers as they expect to grow residential lending due to the anticipated reduction in interest rates by the Federal Reserve, and hoping that housing inventory will improve this year. Liberty is lending within its communities along the Interstate 91 corridor, including New Haven, Middletown, Hartford and even Springfield in Massachusetts.