Competition is heating up in the mortgage market as more lenders increase their production capacity, according to the chief financial officer of Fifth Third Bancorp, a top-ranked lender.
CFO Dan Poston told investors and analysts that the bank ramped up quickly during the fourth quarter to take advantage of the refinancing wave and the new HARP 2.0 refinancing program.
As a result of moving quickly, “We probably captured more than our fair share of business,” he said during an earnings conference call late this week.
But now the market is getting more competitive as rates continue to move lower and other lenders have ramped up their capacity. “And that competition shows both in terms of competition for business as well as for personnel,” Poston said in discussing the bank’s second-quarter financial results.
The Cincinnati-based bank—which ranks 13th nationwide in fundings—originated $7.1 billion in single-family loans in the fourth quarter, $6.4 billion in the first quarter and $5.9 billion in the second quarter.
Despite the 8% decline in originations in the most recent quarter, its gain-on-sale totaled $183 million, up $9 million from the first quarter.
“Gain-on-sale margins were wider in the second quarter, reflecting favorable market trends and a high proportion of retail channel and HARP originations,” the CFO said. “From a spread standpoint, our margins were up 40 to 50 basis points.”
Shifting some production away from the wholesale channel had a “positive impact on margins,” he added.
The CFO expects originations in 3Q will be “slightly higher,” which could have a “slightly dampening effect on overall margins.”
