Irvine subprime mortgage lender New Century Financial Corp. said Friday it did $13.4 billion in loans during the quarter, up 31% from a year earlier.
The gain is part of a resurgence at New Century, which like other mortgage lenders, saw profits squeezed late last year amid rising short-term interest rates.
“We are off to a strong start this year and are on track to meet our profit margin target,” New Century Chief Executive Robert Cole said.
The first-quarter’s loan gain follows New Century’s February report of big increases in loans, profits and interest income for the fourth quarter.
Still, the first-quarter numbers had some nuances.
New Century’s March loans were up 26% from a year ago,not as brisk as February’s 38% and January’s 33%.
And the average interest rate on New Century’s loans in March was 8.4%, down a hair from 8.5% in February.
New Century said lower fees paid to brokers who bring the company loans should help it meet profit forecasts.
Loan rates are critical for New Century. Late last year, the company sought to do more loans but saw profits suffer. In August, the average New Century loan was at 7.2%.
Like other lenders, rising short-term rates have impacted New Century. They’ve pushed up payments New Century and others have to make to buyers of their mortgages packaged as bonds.
That’s eaten into profits as interest income from mortgages hasn’t kept pace.
Word of higher rates on New Century’s loans has helped push the company’s shares up about 25% so far this year. The company counts a market value of $2.6 billion.
For more on New Century, see the April 10 edition of the Business Journal.
