Magazine article American Banker

Thrifts Plan Dramatic Shift Away from Home Loans

Magazine article American Banker

Thrifts Plan Dramatic Shift Away from Home Loans

Article excerpt

Thrifts will be sharply reducing the origination of first mortgages for their own portfolios over the next five years.

That's one of the key findings in a survey of 453 thrifts by America's Community Bankers, the industry trade group. It found that only 30% of thrifts expect to originate first mortgages for their portfolios in five years, down from about 79% in mid-1996.

"Demographics, regulatory flexibility and competitiveness are driving an orderly change in the business strategy," said Paul C. Taylor, senior economist for the trade group.

The future for many thrifts lies in expanding commercial mortgage lending, consumer loans such as auto and home equity loans, and business loans, Mr. Taylor said.

A surprisingly large group of thrifts surveyed already participates in these activities-79% already make loans on new and used autos, 77% make personal unsecured loans, 75% sell credit life insurance, and 81% make home equity loans.

A slightly smaller group-70% of the respondents-extends home equity lines of credit.

Federal student loans are offered by 31% of the thrifts.

The trade group predicts that business loans will be a hot growth area. Less than half of those surveyed offered unsecured short-term business loans and lines of credit-46% and 41% respectively-but an additional 8% plan to enter those markets.

Most thrifts already make business loans secured by real estate. Of those surveyed, 84% said they made loans backed by business real estate, and 83% made loans backed by residential real estate, typically the business owner's home. …

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