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.
Higher interest rates didn’t have much of an impact on home price appreciation in March; Freddie Mac launched new automated underwriting capabilities; Fitch shifts its outlook for ratings of Finance of America Companies to negative; MISMO remains busy.
Rising interest rates helped to push up income tied to mortgage servicing rights more than they reduced income from originations among a group of publicly-traded nonbanks. Results varied to some extent, with one large mortgage company even taking a loss in the quarter. (Includes data chart.)
If projections by the MBA are correct, interest rates for mortgages are levelling off, which should relieve some of the pressure lenders are facing on originations and profit margins.
It’s no secret that mortgage bankers and brokers are cutting workers as lending ebbs in a much higher rate environment. But with the exception of Better.com, the layoffs have not been huge. Yet.
Chairman Mat Ishbia suggests those calling for cost reductions and layoffs at United Wholesale Mortgage don’t understand the lender; impact of Biden administration’s housing plan expected to be “limited;” mortgage costs soaring.
Owning mortgage servicing rights proved to be a great counter-hedge to an ugly origination market in the first quarter. At least two nonbanks benefited: Mr. Cooper and New Residential Investment.
CRA proposal would expand assessment areas for large banks; ICE to acquire Black Knight; Ishbia vows no layoffs at United Wholesale Mortgage; UWM competing on price; MBA concerned about kleptocrat legislation; Fairway unit offering NFTs of individual homes.
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