CALABASAS, Calif. - Countrywide Credit Industries Inc. said Thursday that profits in the quarter that ended May 31 were off 19% from a year earlier.

Countrywide, the largest publicly traded U.S. mortgage lender, said net income fell to $83.5 million, or 72 cents a share, in the quarter, the first of its fiscal year. Revenue declined 2%, to $528.2 million.

However, the results beat the analyst consensus by 2 cents a share, according to a First Call/Thompson Financial survey.

Countrywide blamed the earnings decline on higher interest rates, which make home-loan refinancing more costly to consumers. The Federal Reserve has raised interest rates six times in the past 13 months. Since the end of 1998 the average rate on a 30-year mortgage has risen to 8.22%, from 6.83%, according to Freddie Mac.

Countrywide said mortgage fundings in the quarter fell 37% from a year earlier, when record amounts of homeowners refinanced their mortgages. Loan origination fees fell 43%, to $84.3 million, a reflection of the drop in mortgage fundings, the company said.

Earnings were buffeted by Countrywide's emerging insurance operations. In November it spent $425 million to buy Balboa Life & Casualty Insurance, a home loan insurer. Net premium earns in the quarter rose elevenfold to $62 million.

- Bloomberg News

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