West Hills California Realtorz

Housing picture is full of ups and downs

Residential lending figures are in for Q1 and it’s not a pretty picture for mortgage bankers of all sizes on this side of the pond. The nation’s four largest funders of home mortgages that account for 60% of all originations saw their production volumes take it on the chin in Q1 as rising rates early in the year dampened refinancing activity.

Of course, when it comes to mortgage banking it’s all relative. The big four of home finance Wells Fargo, Bank of America, JPMorgan Chase, and Citigroup saw originations fall by 35%, 33%, 29% and 35%, respectively, when compared with Q4 2010.

But keep in mind that Q4 2010 was the industry’s best in almost two years with $544bn worth of loans reaching the closing table. When Q1 production is compared with the same period a year ago, the situation looks a lot better.

Wells Fargo saw originations increase by 9% with JPMorgan and Citigroup registering gains of 14% and 36% respectively.

Only Bank of America had a decline, with volumes down 14%. All these lenders, except for Wells Fargo, have either exited the broker channel or are in the process of doing so.

Then again the channel is now a fraction of its former self, accounting for less than 10% of all new loans.

Still, home lenders of all sizes usually have a tendency to ramp up hiring when they see even a hint of better market conditions, usually lower rates, and then savagely slash workers when applications tank as they did in the first few months of the year.

Over the past month Wells Fargo and Bank of America combined sent layoff notices to 7,700 full-time mortgage workers.

Both these megabanks claim that few of those let go were employed as loan officers the folks that actually work with consumers to take applications and that the cuts came among processors, underwriters, support staff and in some cases contract workers.

Almost every originator in the nation is anticipating roughly a 25% decline in fundings this year, falling to $1.1trillion from $1.6trillion.

But there’s hope among some firms that the second half of 2011 will bring somewhat stronger volumes, at least when it comes to home purchases.

Of course, the elephant in the room is the fact that refinancings are ebbing significantly. Today refinances account for about 55% of all new applications compared with 75% last year.

It’s anticipated that by the year-end purchase money loans a mortgage used to buy a home, not refinance could account for up to 70% of volume.

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