The top 4 banks saw their collected mortgage origination down ~80% in Q1 vs. the average in the last 3 years.
📍 Fast interest rate hikes put pressure on buyers, as fewer people can afford their largest purchases.
📍 High rate dampens refinance, an option American consumers happily exercised when the interest rate was low.
Once locked in, Americans do not need to worry about the rate for 30 years Canadians have to face immediate rate hikes with variable rates or 2-5 years fixed rate at renewal.
No wonder the Bank of Canada’s moves seemed more effective - it has paused the rate hike twice since March.
📍 With the rate being higher and longer and the mortgage structure favorable to consumers, the mortgage business is not expected to recover for lenders soon.
Wells Fargo, once the No. 1 mortgage lender, decided to exit correspondent business in Q1. It stops being the receiver of the originate-to-sell mortgages underwritten by third-party lenders.
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