Irvine-based mortgage lender New Century Financial Corp. saw a 5% drop in loans last month vs. a year earlier with an even more pronounced dip in subprime lending.
New Century made $5 billion in loans to borrowers with imperfect credit last month, down 18% from a year ago.
The company made $800 million worth of loans to borrowers with good credit in August. The gain reflects New Century’s bid to go after more “prime” loans.
Loans in August were up 9% from July, Chief Executive Brad Morrice said.
“We are pleased with this level given market conditions,” he said.
Subprime lenders are feeling the squeeze of competition, higher interest rates and the prospect of riskier loans going bad.
New Century is going after less risky traditional loans, Morrice said. Interest-only loans were 17% of the company’s subprime loans last month, down from 35% a year ago.
California accounted for 32% of subprime loans, down from 37% a year ago.
“While we have seen an increase in early payment defaults from 2005 levels as a result of the macro-economic environment, the increase has been modest,” Morrice said.
