No one thinks that the mortgage origination environment is about to turn into a wasteland, but with interest rates edging upward, some think April could be a crueler month.
Many lenders enjoyed record origination volume in February, and refinance applications continued to flow in, indicating that March could be another standout month.
But rates on the 30-year Treasury bond have inched up in recent weeks and are now above 6% for the first time since December, leading some to predict an end to the refinancing boom.
"We're expecting a strong closing month in March but think there could be some tapering off commencing in April," said Robert H. Warrington, vice chairman of Old Kent Financial Corp., Grand Rapids, Mich.
"There would be some modest decline if interest rates stay at this level," said Stanford L. Kurland, chief operating officer of Countrywide Credit Industries.
Countrywide, the second-largest mortgage lender, originated $6.2 billion of mortgages last month, over 130% more than in February 1997. Refinancings were 63% of volume for the Calabasas, Calif., lender.
Daily application volume dipped 5% below the January average, to a rate of $500 million a month, but Countrywide's pipeline of loans in process rose by $800 million, to $12.6 billion.
NationsBank Mortgage, based in Charlotte, N.C., originated about $2 billion in February and is on pace to top that total in March, said David A. Keeling, a senior vice president of NationsBank Mortgage and director of its TeleMortgage unit.
Old Kent originated $1.16 billion of mortgages in February, up from $702 million in January. But Mr. Warrington said application volume was a bit higher in January than in February.
So industrywide the peak for refinancing may have come in mid-January, when the long bond hit a low of 5.69%.
At NationsBank Mortgage, for example, refinancing applications accounted for just over 50% of all loan applications in the first few days of March, down from 73% in January and 65% in February, Mr. Keeling said.
But unless rates spike dramatically higher, lenders said, refinancing should remain above the normal level of about 30% of overall volume.
"Borrowers are more financially savvy and a little more patient than they were in 1993," the year of the last refinancing boom, said Gregory A. Davis, senior vice president, production, at National City Mortgage.
Lenders see another difference from 1993. With rates inching upward, some expect that borrowers who had been waiting for rates to bottom out will now rush to refinance, before rates get too high.
This will not happen at National City, Mr. Davis said. Few of its borrowers seem to have been waiting for lower rates, so he is not counting on another mini-boom if rates continue to move up.
Mr. Kurland of Countrywide also expressed doubt there will be a new surge of refinancing if rates pick up. "People are not overly nervous about a general change in the level of interest rates," he said. "There is no real flight or rush to lock in."
Even if refi volume trails off, the industry probably will not suffer the sort of post-boom depression it went through in 1994, lenders said. Refinancing was the main reason for the 1993 mortgage boom; today's record origination levels also reflect strong purchase volumes, spurred by a healthy economy.
"If the housing market stays strong and the refi market stays moderately active," said Old Kent's Mr. Warrington, "there's a chance for record years for a lot of companies."