Amid higher rates, lower volumes, and fiercer competition, Santander Bank decided it will stop originating residential mortgages and home equity loans in the United States.
On Wednesday, the bank announced that it will consider applications for residential mortgage or home equity line of credit (HELOC) on the portal EZApply only until Feb. 11.
The Spanish bank said it will continue to service current loans and honor pending borrowers’ applications. The decision will not impact the commercial mortgage business.
The bank explained in a statement in its portal that the decision “allows us to focus our efforts and resources on products, services, and digital capabilities that let us better meet evolving consumer needs.”
Inside Mortgage Finance reported that Santander residential production totaled $2.7 billion in 2020, but there are no figures for 2021.
In its earnings press release on Wednesday, the bank said it is restructuring its business in the country, mainly consumer products and services. The focus is on disciplined capital allocation and internal synergies.
As part of the plan, in July, the bank announced a deal to acquire the broker Amherst Pierpont Securities, which is waiting for approval by the U.S. regulators. The acquisition will expand Santander’s distribution of fixed income and structured products in the United States.
In the United States, Santander Bank registered 2.3 billion euros in underlying attributable profit to the parent company in Spain in 2021, up 230% compared to the previous year.
Santander’s decision regarding mortgage and home equity is another sign that the good times of the U.S. mortgage industry are in the past. The Mortgage Bankers Association (MBA) estimates that originations are expected to decline 33% year-over-year to $2.59 trillion in 2022.
The 30-year fixed rate mortgage is estimated to hit 4% this year, compared to 3.1% in 2021, according to the association.
Due to the more challenging landscape, mortgage lenders are proactively shoring up vulnerabilities and playing to strengths. LoanDepot is serving more loans in-house, Rocket is expanding its business via acquisitions, Homepoint has reorganized its structure to contain costs, and Guaranteed Rate is focusing on profitable channels, leaving the wholesale channel. Santander was the first victim.