Magazine article American Banker

Mortgage Banker Shakeout Expected on Lower Volume

Magazine article American Banker

Mortgage Banker Shakeout Expected on Lower Volume

Article excerpt

Byline: Paul Muolo

Now that residential application volumes are on the wane - thanks to rising mortgage rates - the obvious question becomes the most wrenching one: When will mortgage bankers begin cutting heads and which firms will bite the dust?

Almost every executive and loan officer interviewed in recent weeks was aware that a day of reckoning is on the way, but most believe that it will be the "other guy" that gets hurt and not them.

Loan originators can be an optimistic lot, but if there's a doubt that a slowdown is on the way, JPMorgan Chase & Co.'s chief executive, Jamie Dimon, made it clear when he recently told analysts that residential loan demand probably peaked in the fourth quarter and that it's highly unlikely that his company will match its fourth-quarter production total of $56 billion.

In December, he said, "application volumes were pretty low. That number has to come down."

When the yield on the benchmark 10-year Treasury neared 3.6% in early January, refinance applications dried up and telephones stopped ringing.

Bill Dallas, the CEO of Skyline Financial, a nonbank lender in Agoura Hills, Calif., said that during the first half of January applications at his shop were off 35%, with originations dropping 25%.

Since then rates have fallen slightly and it looks as though applications are once again picking up. Many lenders are hanging their hopes on purchase money loans increasing significantly this year. …

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