Irvine-based subprime lender New Century Financial Corp. saw a 7% rise in loan volume last month to $4.4 billion, versus a year earlier.
Its volume was down slightly from April, however,a sign growth could be moderating. The company did $4.5 billion in loans in April.
“We are pleased with our year-to-date loan production growth of 22% compared with the same period in 2004 and remain on track to achieve our 2005 production target of $45 billion or more,” said Robert Cole, chief executive, in a statement.
Subprime lenders, who make loans to people with imperfect credit, have had an impressive run during the past few years, along with the hot housing market. Many of the nation’s largest subprime lenders, such as New Century, Orange’s Ameriquest Capital Corp. and Option One Mortgage Corp., an Irvine unit of H & R; Block Inc., are based in Orange County.
This year the industry appears to be cooling somewhat, with less dramatic growth shown by lenders such as New Century and Calabasas-based Countrywide Financial Corp.
These lenders have seen profits narrow by rising short-term rates, which is their cost to borrow money, and falling long-term rates, which is what they charge borrowers.
The yield on a 10-year Treasury has dipped below 4% in recent weeks, while the Federal Reserve Bank has raised a key short term rate to 3%.
The Fed is expected to bump the federal funds rate another quarter point in June. There is some speculation it could stop or ease up on rate hikes after that.
