Mortgage lenders generally seek to make as many loans as they can profitably sell into the secondary market, but for the loans banks and credit unions choose to retain in portfolio, Curinos is seeing several trends:
- Over the past year, rates for portfolio loans have increased 75 basis points more than rates on conforming loans. This shows that banking institutions are demanding yields on their investments that are greater than the general rise in interest rates.
- The loan mix has shifted markedly – adjustable-rate mortgages now comprise the clear majority of portfolio lending (see chart). But, somewhat surprisingly, we haven’t seen a tightening of credit standards.
- Given the shifting appetite for retaining loans in portfolio, we’ve heard recently that lenders are working harder than ever to make sure that their sales teams don’t need to rely on them to remain productive.
Conclusion: Banks and credit unions are using price as the primary means to control the types of mortgage loans they originate and the volume placed on the balance sheet while leaning into hiring salespeople who can originate loans consistent with their evolving priorities.
