Huntsville's increase among nation's best

Rachel and Joshua Garces were looking to refinance the mortgage on the home they built in the Chase area of Madison County about three years ago.

They took advantage of bargain interest rates, locking in at 4.375 percent on a 15-year loan through Worthington Mortgage Group in Huntsville, a big improvement from the interest rate of 6.75 percent on their original 30-year mortgage.

"We're paying only about $80 more a month," said Rachel Garces. "It was no-brainer for us to (refinance). We wanted to pay more down on the principal before we build again" in another year or two.

The Garceses are among those behind the strong consumer-lending activity in mid-sized cities in the country. In Huntsville's metro area, for example, consumer borrowing increased 13.2 percent per household in last year's fourth quarter, compared to the same period a year earlier, according to data provided to The Wall Street Journal by Moody's Economy.com and Equifax.

Huntsville's increase was the largest among 207 U.S. metropolitan areas that were tracked by the two firms.

Superior Bank's Tennessee Valley region has seen its share of lending.

"We made well over $100 million in (consumer and business) loans in 2008," said Vernon Bice, the bank's Tennessee Valley market executive. "Both the consumer and business loan sectors increased."

And loan volume so far this year is on pace with last year, Bice said.

Consumer loan demand continues to be strong at Redstone Federal Credit Union, based in Huntsville.

"We're overloaded right now" with refinancing business, said Joe Newberry, the credit union's president and CEO.

The credit union, the state's largest with about 303,000 members, originated $43 million in mortgage loans in February, a one-month record; it made $17 million in auto loans in January, the fifth-highest monthly total since Redstone Federal opened 57 years ago.

"Some of that (loan demand)," Newberry said, "is because some of the other financial institutions got out of some of the auto financing business or they tightened the underwriting criteria, so it was harder for consumers of modest means to get financing."

Huntsville-based Worthington Mortgage Group, which heavily advertises its mortgage rates, continues to see high refinance volumes.

"We're also seeing purchase activity pick up, especially in the $300,000-and-under price range," said Will Worthington, the CEO of Worthington Financial Holding.

"We've done about $70 million in (VA, FHA and conventional) home loans" since January, Worthington said.

Worthington, who's also CEO of Worthington Federal Bank, said the business has handled about $12 million in consumer loans this year for non-mortgage products such as cars and boats.

Bice suggested that the Huntsville metro area - at just under 400,000 - is small enough to avoid problems common to major metropolitan cities, yet large enough "to attract diverse and stable employers and the workforce those employers need. You've got to have both."

"The city has excellent fiscal stability, we have quality public education and we have good infrastructure."

With that combination, he said, "it just works."