The nation's top five mortgage lenders, thriving on the refinancing boom, posted spectacular originations during the first half of the year.
An American Banker survey found that loan production at the top five surged by an average of 35% from a year earlier, more than double the gain of the mortgage industry as, a whole.
The leaders' hefty increase was the latest sign of a major consolidation in the businesses of writing and servicing home loans.
Countrywide in Lea
The top five lenders accounted for about 16% of all new mortgages in the first half of 1993, up from 14% a year earlier. The ranking of the top four lenders was unchanged from the middle of last year, with Countrywide Credit Industries leading the way, the survey found. Countrywide, based in Pasadena. Calif. produced $17.2 billion of loans. up 41% from the first half of 1992.
Meanwhile, North America Mortgage Co. of Santa Rosa, Calif., rocketed to the No. 5 post, dislodging Chemical Banking Corp.
North American, emblematic of a group of mortgage companies that went public last year. boosted its originations 39% in the first six months of this year, to $7.05 billion. North American made its initial public offering stock last July.
"We are entering the second half of 1993 in the strongest position, both operationally and financially, in the company's history," said John F. Farrell, North American's chief executive.
Spurred by Low Rates
Industrywide, originations have been surging as a result of low interest rates. The rates have unleashed a torrent of refinancings and boosted home purchases.
Originations for the first half of the year totaled $412 billion, up 17% from a year earlier, according to estimates by the Federal National Mortgage Association.
The leading lenders are clearly operating in class of their own.
Countrywide, which nearly doubled the industry record last year with originations of $31 billion. could approach $45 billion for all of 1993, analysts say.
The company finished June with a staggering $8 billion "pipeline" of loans in process. Mortgage banks typically close between 50% and 60% of their pipeline each month.
Close on Countrywide's heels. Prudential Home Mortgage Co. Inc., Clayton, Mo, produced $15.8 billion of loans in the first half, up 43% from 1992's six-month tally. Prudential said two-thirds of the loans it had produced so far in 1993 were refinancings.
With mortgage interest rates at the lowest levels in more than two decades, Prudential set a one-month company record in June. with $3.8 billion of production.
Norwest Mortgage Inc., Des Moines, Iowa, posted a 36% increase for the first half of the year, bringing its originations to $13.7 billion. Pete Wissinger. head of production for the eastern region, said that 40% of the bank's retail loans were refinancings.
Fleet Mortgage Group Inc. Columbia, S.C.. estimated that its originations for the first half would end up between $10.4 billion and $10.6 billion. That would be a 15% increase over the first half of 1992.
Problems in Refinancings
Kevin Race, Fleet's chief financial officer. said his company was expecting another strong year in originations, but noted that the high level of refinancing also poses problems. Fleet and other companies with big mortgage-servicing businesses lose some existing business as consumers reach for refinancing deals from other lenders.
"The refi activity is kind of a good news-bad news situation," Mr. Race said.
Chase Manhattan Corp. apparently took the No. 6 position. It originated $6.6 billion of mortgages, up 5% from a year earlier. A company spokeswoman said 70% of the loans produced were refinances.
Chemical followed close behind with $6.4 billion. up a modest 5% from the first half of 1992.
At least one major lender actually posted a decline. Sears Mortgage Corp., which is being sold to PNC Bank Corp. saw its originations fall 8% in the first half of the year. to $4.99 billion.Booming BusinessVolume of top five mortgageoriginators, dollars in billions Volume Change first half from year of 1993 earlierCountrywide $17.23 +41%Prudential 15.80 +43%Norwest 13.7 +36%Fleet 10.5 +15%North American 7.05 +39%All originatorsnationwide $412 +17%Sources:American Banker, companies