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Price Is Driving Changing Dynamics In Portfolio Lending

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:  

  1. 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. 
  2. 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.
  3. 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. 

Figure: Non-Conforming Volume And Rate Drift – Purchase, Funded

In the non-conforming space, ARMs continue to have staying power,
accounting for more than half of all production.​

June 6, 2024

AI’s Value Prop: A Cheaper Path To Customer Primacy

The various product lines at banks are in constant competition for customer attention. But uncoordinated messaging comes with a high cost: Curinos analysis shows that the typical FI leaves $70 per customer on the table because relationship nurturing is poorly orchestrated across channels.
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June 4, 2024

DAF Levels Are Down. What Can Be Done?

As commercial deposits shift away from DDA, the loss of deposit administration fees (DAF) is a key impact. DAF are the largest single charge in treasury management, totaling more than 15% of fees at most TM banks.
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May 30, 2024

Defining Personalization Is The First Step Toward Greater Adoption

There’s a lot of talk about personalization in banking these days and a lot less action. In Curinos’ new Personalization Benchmarking Study, most of the responding FIs say less than 25% of their marketing is personalized.
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  • Author
    • John Sayre

      John Sayre is Vice President of Client Success for Curinos and has been a Secondary Marketing and Business Development professional in the mortgage industry for over 30 years.  Sayre has held senior positions at Guardian Mortgage, Caliber Home Loans, and Nationstar.  He also spent 15 years at Fannie Mae with his last position being Vice President of Single Family Business for the Western United States.  Sayre holds a degree in Economics from Claremont McKenna College and lives in Dallas, TX. 

      View all posts Vice President, Client Success
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