Rising mortgage rates shift lenders’ attention to homebuyers


Mortgage lenders are refocusing on home buyers to revive activity in times of slower refinancing.

Purchase mortgages accounted for nearly half of loans bundled into government-guaranteed securities and sold to investors in the third quarter, according to Inside Mortgage Finance, an industry research group. This is the highest share since before the pandemic lowered interest rates and triggered a record wave of refinancing.

“Last year and the first half of this year, we were all right with refits, and the phones kept ringing,” said Michael Menatian, owner of Sanborn Mortgage Corp. in West Hartford, Connecticut. “It’s pretty much over. . “

A still vibrant housing market means that many buyers need financing to secure new homes. But rates have risen recently, reducing the number of people who could lower their rates or save time on their mortgages by refinancing.

The 30-year average fixed mortgage rate fell to 3.05% last week, according to Freddie Mac, the highest level since April although still low by historical standards.

The change means homebuyers are in a better position to negotiate a lower interest rate, said Sam Polland, loan officer at Intercoastal Mortgage LLC in Potomac, Maryland.

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Lenders again packed hundreds of billions of dollars in refinance loans last quarter. But business is harder to come by these days, Menatian said. Instead of taking inbound calls, he phoned clients whose home values ​​had risen enough that they could refinance their mortgage insurance policies.

Rising rates could pose problems for lenders whose growth during the pandemic mortgage boom depended heavily on refinancing. At the same time, lenders that focus more on the buying market have recently flourished.

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US Bancorp,

for example, granted about half of its mortgages to buyers in the first six months of this year, according to Inside Mortgage Finance. It generated more than $ 28 billion in the third quarter, the highest in years and up 11% from a year ago.

The bank is expected to continue to benefit from strong home sales as it focuses more on buying mortgages, CFO Terry Dolan said on a call with analysts on Thursday.

Rocket Cos., The nation’s largest mortgage lender, granted 10% of all refis in the first half of the year. Refis represented 88% of the company’s mortgage business during this period.

The company wants to become the largest retail purchase lender by the end of 2023, chief executive Jay Farner said in August. Its stock is down 18% this year.

Write to Ben Eisen at [email protected]

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