The broker share of conventional-conforming mortgages declined on a sequential basis to 20.3% in the first quarter of this year, according to surveys of various lenders. (Includes two data charts.)
Rate locks for purchase mortgages declined from April to May. Numerous factors are depressing demand for the loans: higher interest rates, accelerating home prices and inflation.
No channel was immune to the downturn in jumbo originations in the first quarter of 2022, but the retail channel suffered the least. There were also wide variations at the lender level in originations trends. (Includes data chart.)
Originations of adjustable-rate mortgages declined in the first quarter of 2022, but at a slower rate than the downturn in total first-lien production. ARMs accounted for 7.9% of total originations during the quarter. (Includes data chart.)
Spreads on expanded-credit MBS issuance have widened significantly this year as lenders sell mortgages originated prior to the runup in interest rates. Issuance has slowed but market participants are optimistic in the long term.
Wells Fargo is in the process of changing where residential loans fit into the bank’s overall business. The company’s CEO cited GSE mortgages as a product that presents risk to the bank.
The rapid increase in interest rates seen in the first quarter took a big bite out of income from production and helped to goose servicing earnings. And while a downturn in originations was expected this year, it could be worse than expected.
According to new research paper, nonbanks use their MSRs to help fund operations in a rising rate environment, resulting in stronger originations in comparison to banks.
The expanded-credit market was the only sector to see originations increase in the first quarter. The products accounted for 2.2% of total mortgage originations. (Includes data chart.)