How low can you go? Just when it looked like interest rates couldn’t get much lower, they jumped a full percentage point in June. While that’s a positive sign for banks squeezed by razor-thin margins, it also means the robust refi market’s days are numbered.
Of course, a quick look at Banker & Tradesman’s Fast 50 will show you that at least during the first half of the year, refinance activity was strong and purchase activity is on the rebound.
The Fast 50 showcases those lenders in the state who did the greatest volume in loans for the first half of this year, compared with the same period last year. And though big-name players like Quicken, Bank of America, and Citicorp Mortgage dominated some of the top spots, there was still plenty of room for local names to scoop up some of the action.
For instance, Brookline Bank increased its purchase-money mortgage deals by more than 3,000 percent from last year, closing 62 deals between January and June, compared with just 2 in the same time frame last year.
Berkshire Bank more than doubled its refinance loans this year, closing 1,630 during the first six months of 2013 compared with 804 for the same time frame last year. Berkshire also made 505 purchase-money mortgages this year, a 65 percent increase over the 306 loans it wrote last year.
Undoubtedly, the Pittsfield-headquartered bank has benefitted from its aggressive growth strategy, which included its acquisition of the Needham-based Greenpark Mortgage Corporation last spring and along with it the endorsement of the Massachusetts Teachers Association.
Paul Gershkowitz, first vice president of Greenpark, said Berkshire Bank has picked up a good deal of business through the teachers association and by good old-fashioned word of mouth, building relationships with Realtors, attorneys and insurance representatives.
Credit unions also got a piece of the pie in this year’s Fast 50. Digital Federal Credit Union increased its purchase-money deals 39 percent, closing 135 loans this year, compared with 97 last year.
Chelsea-headquartered Metro Credit Union closed 1,246 refinance deals in the first half of the year, compared with 850 last year, and more than doubled its purchase-money mortgage business, closing 84 such loans in the first half of this year, compared with 38 for the first half of 2012. According to Chief Operating Officer Tom Nadeau, year-to-date first mortgage production volume through the end of July increased 72 percent over last year.
Nadeau credited much of that increase to Metro’s own growth efforts – half of that organic and the other half made through mergers with smaller credit unions.
Looking Ahead
But while some banks and credit unions have taken advantage of the low-interest rate environment to close refinance deals, other players have pulled back from the refinance and second mortgage side of the business to concentrate more resources on purchase-money mortgages.
“We expect the refi market will decline certainly,” Nadeau said. “We’ve anticipated that and have been broadening our channels over the last year to grow more of our purchase market.”
That included adding 10 new mortgage originators, as well as jumbo mortgage products.
And Leader Bank hasn’t entirely dropped out of the refinance game, but Jay Tuli, vice president of retail banking and corporate development, said they’ve long anticipated the increase in interest rates and have accordingly shifted focus to purchase money mortgages.
“We knew that as soon as that happens, the refi market is going to shut down, and that’s a big percentage of our business,” he said. “We’ve been trying to prepare for that by keeping our purchase programs and operations very strong, and even though the refi market has slowed down a lot, we’ve gained a lot of share in the purchase market.”
Those purchasers run the gamut from families upgrading to bigger homes, to newlyweds buying their first house, to retirees downsizing to smaller condos, and Tuli said the bank has streamlined its operations in order to close those deals fast – typically within 30-45 days – so the buyers can get into their new homes sooner than later.
That strategy has apparently paid off. While Leader Bank closed 590 purchase-money mortgages during the first half of 2012, it saw a 42 percent increase in that number this year, closing 836 mortgages between January and June.
Tuli said, “We won’t do as much refi volume as last year, but our business hasn’t fallen as much as it would have because we’ve really focused on growing presence in the purchase market.”
Fast 50 2013
To view the 2013 Fast 50, click here.
Email: lalix@thewarrengroup.com
