Mortgage originations by the nation's thrift industry slumped in the first quarter as consumers continued to turn up their noses at adjustable-rate loans.

Volume fell by about 45% from the level in the fourth quarter of 1992 and by about 12% from that in the first quarter of 1992, according to data recently released by the Office of Thrift Supervision. (See accompanying table.)

With fixed-rates at 7% to 7.5%, borrowers have been showing a strong preference for such loans although adjustable rates of about 5% are available.

Afraid of a Squeeze

But thrifts, which hold most of the mortgages they write rather than selling them, do not want fixed-rate loans because they fear getting caught in a squeeze as rates rise. As a result, thrifts have been ceding market share to mortgage banks, which are happy to originate, and sell, whatever borrowers demand.

According to figures from the Department of Housing and Urban Development, thrifts originated 16.2% of all home loans in the first quarter, down from 20.8% a year earlier.

2 Biggest Thrifts Hurt

The two biggest, H.F. Ahmanson & Co.'s Home Savings of America and rival Great Western Bank, both based in suburban Los Angeles, had sharp declines year to year, about 29% and 30%, respectively.

Sam Lyons, senior vice president for mortgage banking at Great Western, attributed some of the decline to a surge in refinancings in the 1992 quarter. But other factors were also at work. "Mortgage bankers continue to make inroads in the marketplace," he added.

"If you are trying to grow assets in this low-rate environment, it's going to be a very tough challenge," he said.

"You're doing well if you just replace runoff due to prepayments, let alone grow assets. It's hard to see any appreciable growth of assets in this atmosphere."

Redwood Unit a Big Gainer

The figures for the first quarter showed a split between the biggest thrifts and the industry as a whole. At the top 25 thrifts, originations dropped by $5.26 billion, or 24.6%, accounting for most of the $5.54 billion first-quarter decline by all thrifts insured by the Savings Association Insurance Fund.

One of the few top thrifts showing a big year-to-year gain was Allied Savings Bank of Santa Rosa, Calif., a unit of Redwood Empire Bancorp.

With half of its business in mortgage banking rather than portfolio lending, it managed a gain of about 133%. A major capital infusion from its parent also helped, according to John Simons, chief financial officer.

The other thrift with a big gain was First Federal of Rochester, N.Y., a unit of CT Financial Services Inc., London, Ontario.

Ronald Leet, senior vice president for mortgage lending, said First Federal experienced a surge of applications near the end of 1992 that resulted in heavy loan closings in the first quarter of 1993.

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