Ponder this as you sip your Sunday morning coffee: Mortgage bankers think "something really bad is going to happen." That's the view of Jeff Lebowitz, the founder of Mortech, which conducts research for the mortgage industry. The Chester, Conn., company's study queried 330 mortgage banking executives before the war in Iraq and found them increasingly and persistently pessimistic, even during this boom time.
How booming? Two weeks ago, Lebowitz delivered his assessment to a mortgage industry meeting, a trade group announced that the number of applications to refinance home loans had shot up astronomically, again, to a new record.
"Even though business has been good for three years, there has been a deterioration in confidence," Lebowitz said. "We've seen a steady decline of lenders who think that business is going to grow and grow profitably.... We have not seen that level of distress in their attitudes before."
Even as Lebowitz released his study earlier this month, the mortgage business was digesting a growing chorus of utterances, including one from Federal Reserve Chairman Alan Greenspan, that America's long-running refi madness was about over.
But the attitudes in Lebowitz's survey don't necessarily mean bad days ahead for housing, maybe just bad days for mortgage firms, which have mushroomed in the last three years. Lebowitz sees the business becoming leaner, meaner and more competitive.
"We asked lenders what their strategy is going to be," he said. "We got a sharp jump in the number of lenders who are going to focus on increasing their share of mortgage originations." Some of them might underprice their first mortgage loans in order to get a piece of a shrinking pie, he explained.
It's good news, bad news. "They're going to be developing a competitive environment that might be good for consumers," Lebowitz said. "On the other hand, it might be deadly for lenders."