Thrifts will be sharply reducing the origination of first mortgages for their own portfolios over the next five years.

That's one of the key findings in a survey of 453 thrifts by America's Community Bankers, the industry trade group. It found that only 30% of thrifts expect to originate first mortgages for their portfolios in five years, down from about 79% in mid-1996.

"Demographics, regulatory flexibility and competitiveness are driving an orderly change in the business strategy," said Paul C. Taylor, senior economist for the trade group.

The future for many thrifts lies in expanding commercial mortgage lending, consumer loans such as auto and home equity loans, and business loans, Mr. Taylor said.

A surprisingly large group of thrifts surveyed already participates in these activities-79% already make loans on new and used autos, 77% make personal unsecured loans, 75% sell credit life insurance, and 81% make home equity loans.

A slightly smaller group-70% of the respondents-extends home equity lines of credit.

Federal student loans are offered by 31% of the thrifts.

The trade group predicts that business loans will be a hot growth area. Less than half of those surveyed offered unsecured short-term business loans and lines of credit-46% and 41% respectively-but an additional 8% plan to enter those markets.

Most thrifts already make business loans secured by real estate. Of those surveyed, 84% said they made loans backed by business real estate, and 83% made loans backed by residential real estate, typically the business owner's home.

Loans backed by the Small Business Administration are made by 32% of the thrifts; another 13% plan to enter that market.

Contrary to what one might expect, home builders aren't the prime recipients of thrift business loans. Only 17% of thrifts surveyed limited their lending to builders.

Mortgages, though projected to shrink as a share of thrift assets, will continue to make up 70% of assets until 2000, the survey found.

Here, too, thrifts are testing new ground. One-third of thrifts surveyed make FHA and VA loans. These were once the sole province of mortgage bankers.

The secondary market-chiefly Fannie Mae and Freddie Mac-heavily influences thrift mortgage origination strategies. Of thrifts surveyed, 60% said they sold at least some loans to the secondary market. A slightly larger share-65.5%-originate even loans intended for their portfolios to secondary-market standards. About one-third said they use credit bureau scores in originating mortgages.

Construction loans for condominium and rental units are popular, as they typically carry higher profit margins.

Of thrifts surveyed, 71% offer single-family speculative construction loans, 86% make loans on homes already sold, 64% make owner-occupied condo construction loans, and the same portion make loans to construct multifamily rental loans.

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