Subprime mortgage lender New Century Financial Corp.’s loan volume was $5.1 billion in November, up 42% from a year ago, the company reported Wednesday.
The total includes loans made by its recently acquired RBC Mortgage Co. operation.
The Irvine-based lender said it has been boosting the interest rate on the loans it makes to protect profits in the wake of rate increases by the Federal Reserve Board. New Century saw its profit slip in the third quarter.
“We have been very focused on increasing our coupon in an effort to improve our gain-on-sale execution and are pleased to report that our weighted average coupon for loans originated through our historical operations increased to 7.9% in November from 7.65% in October,” said Robert K. Cole, chairman and chief executive, in a statement.
The mortgage industry is watching rates carefully. New Century competitor Ameriquest Mortgage Co. of Orange recently cut 10%, or 1,500 workers, from its staff as interest rate increases threaten to slow the housing market.
Mortgage lenders typically pool their loans and sell the package on Wall Street as bonds. Investors’ appetite for mortgage bonds has weakened, and lenders are finding they need to raise rates to sustain profits.
“While our rate increases reduced our monthly total loan production volume from peak levels experienced earlier this year, our year-to-date production of $50.8 billion is on track to exceed our 2005 total loan production guidance range of $50 billion to $55 billion,” Cole said.
