Mortgage Specialists See Sharp Decrease

Slowdown: So Many Lenders, So Few Takers(January 9, 2006) --

Look for an 18.6-percent decline in originations this year, says the Mortgage Bankers Association.

Countrywide Financial Corp., National City Corp., and Ameriquest Capital Corp. are among the lenders that have already begun to downsize in response to a drop in mortgage demand.

Large, diversified financial companies should fare well this year, while lenders that handle only mortgages or that financed scores of subprime borrowers and made numerous exotic loans in recent years face high default rates and funding shortages as well as the prospect of corporate takeovers. According to Bank of America securities analyst Robert Lacoursiere, "We expect the declines in mortgage volumes will be a key catalyst for consolidation."

Source: Business Week (01/09/06); Hibbard, Justin

Ed.'s Note: This is only about the fifth notice that the "refi boom" is ending, so consider yourself warned. Seriously, however, I do not doubt that this type of decrease could, and probably should occur. Considering the number of borrowers who have refinanced their mortgages in the past five to six years just for the sake of refinancing, and a slowing in the real estate purchase market, lenders will have to tighten their collective belt.