Mortgage bankers have reason to be cheered by the recent strong upturn in the origination market. The news is good on several fronts. Adjustable-rate mortgages have not represented any stiff competition for fixed-rate lenders in a long time.
The Mortgage Bankers Association of America's (MBA) economics department put the ARM-market share at about 25 percent earlier this year. By early April, the ARM to fixed-rate mortgage spreads had widened to more than 200 basis points, yet fixed-rate mortgages remained at very attractive levels for consumers. The ARM is not expected to stage a big comeback in the near term.
That is all very rosy news for mortgage bankers. On top of that, the sheer number of thrifts pushing discounted ARMs has dramatically shrunk, which has stifled the fierce price-based competition of past years. Many of the purveyors of that strategy have now been put out to pasture courtesy of the RTC.
But there are many other hopeful signs that spring is here for mortgage bankers and that spring 1991 will be a good one. Solid mortgage banking operations have shown great resiliency in finding warehouse lines in the face of very tight credit...