Mortgage activity rising after Fed’s emergency rate cut, Truist chief says – American Banker

Mortgage activity rising after Fed’s emergency rate cut, Truist chief says  American Banker

The mortgage business at Truist Financial has been booming since the Federal Reserve’s emergency rate cut earlier this month.

Kelly King, the Charlotte, N.C., company’s chairman and CEO, said during a conference in New York hosted by RBC Capital Markets that the spike in activity could extend well into the future as rates remain low.

Truist has seen “a substantial increase in applications,” especially for refinancings, prompting the company to bring on more mortgage-related personnel, King said. He did not disclose the number of applications or how many employees Truist could hire.

Read more: Complete coverage of the coronavirus impact

“We, like most everybody else, are scrambling to try to get more capacity,” King said.

“Our spreads are widening, which is not exactly what you would expect, but because the volume is so high nobody can handle it all,” he added. “Spreads are widening while volumes are going up. So all of that’s good. … The mortgage business is good.”

Kelly King, chairman and CEO of Truist Financial, is touting the underlying strength of the U.S. economy despite coronavirus fears.

The Fed’s March 3 decision to slash its benchmark interest rate by 50 basis points came in response to growing coronavirus fears. A week later, health officials say more than 750 people in 36 states and Washington, D.C., had tested positive for the virus, which has killed 26 people in the country so far.

A crash in oil prices on March 9 contributed to volatility in the U.S. stock market, increasing concern that a recession is looming. Meanwhile, businesses are on watch and, in some cases, implementing work-from-home plans to try to limit the spread of the virus.

Some of Truist’s commercial clients are expressing concern or worry about what lies ahead, King said.

“But there’s no real evidence today that it’s impacting their businesses … because the underlying businesses are doing pretty well,” King said.

“We have to remember that the underlying economy is really good,” he added. “We have extremely low interest rates, extremely low inflation. We just added 275,000 new jobs. … And that’s what we’re hearing form our clients.”

Truist is talking to clients about implementing interest rate floors, King said.

“In terms of the other effect of lower rates, it’s obviously challenging for us in terms of pricing new credits, so we’re beginning to talk with our clients about rate floors because these rates are getting unacceptably low,” he said. “We believe that will help us on the downside with regard to” net interest margins.

Source: americanbanker.com

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