Warehouse finance volumes are down noticeably this year as originations sag in the primary market. The only good news to speak of is that some originators might be approaching break-even. (Includes data chart.)
Even though originations are down roughly 50% this year, investors are still willing to buy mortgage companies, believing the downturn won’t last forever. Of the sales that have occurred, many involve asset transfers.
First Republic Bank isn’t increasing its interest rates for jumbo mortgages at the same pace that the Fed is increasing interest rates, leading to lower margins for the bank.
Redwood acquisitions of jumbo mortgages declined by more than 70% on a sequential basis in the third quarter. Officials at the REIT suggested that Redwood will continue to limit loan acquisitions until market dynamics improve.
As bad as originations were this year, 2023 is projected to be worse. Purchase-mortgage business is expected to decline even as mortgage rates come down and home prices level off.