Mortgage Firms Are Likely to Post Higher Earnings
AuthorAffiliation Staff Reporter of The Wall Street Journal</br></br>Analysts say loan-application volume fell late in the quarter as interest rates and mortgage rates rose. Though the drop in volume didn't hurt first-quarter earnings, it could trip up results later this year, starting as early as the current quarter.</br></br>"We haven't really begun to see the impact of higher rates on originations," said David S. Dusenbury, a research analyst at CS First Boston Corp. Total originations for the industry surged to more than $200 billion during the first quarter, up from $118 billion a year earlier, the analyst said.</br></br>Mortgage rates tracked interest rates lower for much of the first quarter, dropping as low as about 7% from 9 1/2% in January 1995. Attractive mortgage rates continued to make fixed-rate mortgages the loans of choice among home buyers, who often opt for adjustable-rate mortgages when interest rates are high.</br></br>"One out of every two mortgages [during the quarter] was a refinance-driven loan," Mr. Dusenbury said. "A high number of refis translate into a high volume of fixed-rate mortgages."