Although quarterly production rose for Flagstar Bancorp, it already expects a decline in the next quarter's numbers due to a rising rate environment.
The Michigan-based company reported it closed $9.5 billion in residential mortgage loans during the first quarter, $1.7 billion more than the previous quarter but 37% lower than the record production recorded in the first quarter of 2003.
Chief executive officer Mark Hammond noted that the company ended the quarter with a $5.6 billion pipeline and strong March results. However, he added that "the abrupt rise in rates on April 2 was not totally unexpected and will slow our production in the coming quarter to levels consistent with our earlier projections."
Mortgage rates rose after the release of a strong March employment report. Within one week, the rate on 30-year fixed-rate mortgages jumped more than a quarter percent.
The production report from Flagstar, which says it is the second largest banking institution headquartered in Michigan, follows glowing announcements from other major lenders such as Countrywide and New Century.