Banks upbeat on mortgage market

Puerto Rican mortgage lenders see their business expanding despite a slowdown in home lending on the mainland United States, according to local banks. "We began taking aggressive steps to increase mortgage originations this year, including installing a new mortgage management team by the end of the second quarter. And we furthered plans to open new financial centers and remodel others, in line with our strategy of provide full banking and financial services to our target market," Oriental Financial Group CEO José Fernandez said in a first quarter earnings statement Thursday. Mortgage loans, which make up about 87% of Oriental's total net loan book, increased 14% year-over-year to US$719mn for the first fiscal quarter ending September 30, 2004. "Relative to the US, I think Puerto Rico's mortgage industry will still be strong, driven in part by a housing shortage," Keefe, Bruyette, & Woods equity analyst Bain Slack told BNamericas. Doral, which operates 56 mortgage-banking offices in Puerto Rico and has a loan book of about US$13.9bn, said in statement on Wednesday that it would report record loan production in its fourth quarter thanks to the Island's robust housing market. According to Doral CEO Salomon Levis, the company has a strong mortgage backlog and a substantial pipeline of future mortgage production thanks to strong demand for new homes, especially in the area of government-sponsored affordable housing. Market observers say Oriental and Doral want to reassure nervous investors following bad news out of California based mortgage bank Countrywide Financial. Countrywide on Wednesday reported a 47% drop in third quarter revenues due to a slow down in mortgage refinancings, sparking a broad sell off in mortgage banking stocks.