Ask lenders about today's home loan pipelines, and their mood suddenly shifts. After a heavy sigh, they say applications are so much lower in the wake of the interest rate rise that present pipelines seem puny.

Pipelines today are "like the incredible shrinking man," said Michael Conway, North American Mortgage Corp., Calif.

In June, applications at North American were down 58% from a year earlier. Mr. Conway said the lender's current pipeline -- approved applications that have not yet closed -- has dropped as much as 70%.

Mr. Conway said North American has a greater number of adjustable-rate mortgages, a staple of a home purchase market. Today 40% to 45% of its pipeline consists of adjustable loans, he said. Late last year, only about 20% of North American's pipeline was ARMs.

The pipeline at Old Kent Mortgage Services Inc., Grand Rapids, Mich., is down only 20% compared with last year, said Robert H. Warrington, president and chief executive officer.

But he's expecting applications to be off 40% for the year.

Old Kent's pipeline is now at $375 million. Last year it peaked at $600 million and averaged $500 million, Mr. Warrington said.

'Half the Pipe It Was'

Old Kent now processes loans in 14 or 15 days and closes loans in 30 to 35 days. The lender is "ready to close before the borrowers are ready to move in," he said.

Metmor Financial Inc.'s pipeline is now less than $200 million, according to Rick A. Aneshansel, vice president.

"It's half the pipe it was," he said.

While Metmor's pipeline is split evenly between wholesale and retail originations, wholesale applications have been hit harder at the Overland Park, Kan., lender.

But only 25% to 30% of Metmor's applications are ARMs. Most lenders are filling 40% to 50% of their pipelines with adjustable-rate loans.

He attributed that to Metmor's Midwest origination focus.

By comparison, the pipeline at NBD Mortgage Co., Troy, Mich., is 60% ARMs, said Paul H. Swan, senior vice president. And he said the ARMs percentage was only slightly smaller last month.

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