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Mortgage lending plunges to lowest level since 1997
Economist sees tipping point as origination plummets
Mortgage lending in the U.S. has plummeted to levels not witnessed in close to 17 years.
The first quarter of 2014 saw $226 billion in loan volumes, according to data from the Mortgage Bankers Association. The figure has not been that low since 1997, and is one-third of the average amount in 2006. All-cash purchases have soared to more than 40 percent, thus lifting housing prices and reducing lending.
Thirty-four percent of Wells Fargo’s originations in the first quarter went to the refinancing of customer loans, a drop from 69 percent year-over-year.
“Banks large and small are going to have to adapt to a new reality because mortgage origination volumes going forward aren’t going to support the big businesses they’ve had in place for the last few years,” economist Stephen Stanley of Connecticut-based Pierpont Securities LLC. “They’re going to have smaller, leaner operations, and we’re seeing them make that shift.” [Bloomberg News] — Mark Maurer