Match 2000 against the past six months if you want proof that mortgages are a boom-and-bust industry.

Given that size helps companies survive sharp ups and downs, the recent swings indicate that the industry’s consolidation will continue.

Last year loan volume and lenders’ profits suffered badly when interest rates climbed toward 9%. This hurt even more coming so soon after the record high of $1.5 trillion mortgages originated in 1998. “Two thousand was a tough year for most players,” said Michael McMahon, an associate director at Sandler O’Neill & Partners. “Mortgage lending is a volatile industry. You make a lot of money in the good times, which come every three or four years, but in the lean years, you make less — or give something back.”

On the retail lending side, 2000 was a giveback year.

A survey of 37 lenders released Thursday by the Mortgage Bankers Association and the Stratmor Group, a consulting firm, said the weighted average return on equity, a key measure of profitability, fell 3.3 percentage points from 1999, to 15.8%. Retail lending was especially hard-hit, with average profit margins dropping 18 basis points from 1999, to a negative 3 basis points. The MBA said this translates into a pretax net loss of $37 per loan in 2000 compared with net income of $189 per loan in 1999.

“We see a clear trend in the results from the 1998 timeframe, 1999, and into 2000,” said James Cameron, a partner at the Stratmor Group. “The falloff took place over a three-year period.”

Records in production and profit were set in 1998, Mr. Cameron said, and 1999 turned out to be average. In 2000, however, margins and production declined, bringing a lot of pain to the business.

Analysts all agreed that in the foreseeable future mortgage lending will remain an industry in which the strong will only get stronger. Large lenders still have much greater technological resources than small firms, as well as lower costs in servicing and other operations.

“In the broker and correspondent wholesale channels, the megalenders clearly have an advantage due to their scale,” Mr. Cameron said.

Consequently, analysts said, the industry’s trend toward consolidation should continue, though interest rates’ direction this year reduces the urgency. Indeed, they said, another gold rush may be under way.

After peaking in mid-May 2000 at 8.64%, the average 30-year fixed rate fell as low this year as 6.98% (in the week of Feb. 8). As a result mortgage companies are adding employees to handle a deluge of business. Of course, the sharper the boom, the more vulnerable companies can become in the face of a bust. A topic of much debate is whether lenders have added too much, too fast.

Thomas O’Donnell, an analyst at Citigroup’s Salomon Smith Barney, said he expects that volume this year will come in lower than many have projected.

Refinancings have peaked, he argued, and they need interest rates below 6% in order to remain strong. Though the purchase market is still bolstering volume, he said, he believes the yearend figures will be disappointing.

Others, however, said that this time around lenders have become better at managing the boom-and-bust cycle. Companies are not only getting maximum profits during the good times, several analysts said, but are also doing more to prepare for the inevitable downturn through heavy cost-cutting and technology investments.

Marina Walsh, an analyst at the MBA, said many mortgage lenders are holding down hiring while maintaining customer service levels, and Stratmor’s Mr. Cameron said lenders have done more to centralize their operations, cutting down on staffing in branches.

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