Redwood increased its locks of jumbo mortgages on a sequential basis in the third quarter while First Republic Bank’s lending declined.

The flexibility and innovation shown by mortgage lenders during the pandemic should be incorporated into everyday practices, according to panelists at the Mortgage Bankers Association’s annual convention.

Among a group of jumbo lenders that report originations by channel, the broker share increased to 7.0% in the second quarter from 1.6% in the first quarter. The increase in market share was largely tied to United Wholesale Mortgage.

Lenders can’t keep up with the demand for non-QMs from investors in the secondary market. Originations are expected to grow when the agency refi wave crashes.

Non-QM lenders believe the market is going to grow. The optimism has yet to be reflected in market share, but there’s always next year.

The expanded-credit sector is finally bouncing back from the disruptions faced for much of 2020. Originations in the second quarter of 2021 were close to pre-pandemic levels. (Includes data chart.)

Originations of jumbo mortgages increased by 32% in the second quarter while total first-lien originations declined, helping the sector gain market share. Still, the share is below pre-pandemic levels. (Includes data chart.)

Jumbo mortgages and non-qualified mortgages can generate better margins than agency products. Still, the loans don’t necessarily offer a guaranteed path to profits.

The shift toward more purchase-mortgage business in the agency market appeared to help the correspondent channel the most at the expense of wholesale-broker. (Includes two data charts.)

Lenders are making moves in anticipation of an uptick in non-QM lending. The wildcard is interest rates.