Greater Hartford’s mortgage lending industry is about to get more competitive.
The Savings Bank of Danbury is entering the market with plans to open by the end of this month four new loan production offices in West Hartford, Simsbury, Farmington and Wallingford.
Martin Morgado, executive vice president of the $768 million bank, said the Danbury lender also plans to hire five to 10 residential mortgage lenders in Greater Hartford as it prepares to significantly ramp up that business.
“Mortgage lending is something we’ve been pretty aggressive in and we’ve always seen Greater Hartford as an attractive market,” Morgado said. “We see a lot of opportunity there.”
The Savings Bank of Danbury has 13 branch locations scattered across Fairfield and New Haven counties. Its four new Greater Hartford offices will be strictly for loan production and be housed in space held by real estate brokerage firm Keller Williams Realty.
Morgado said Savings Bank of Danbury has not established a referral partnership with Keller Williams, but the cohabitation does provide convenient access to potential homebuyers.
Savings Bank of Danbury will also be firmly embedded in some of Greatest Hartford’s wealthiest suburbs, areas other lenders and money managers have been eager to serve.
The banks entrance into Greater Hartford comes at a time when many community lenders are becoming much more active in the residential mortgage business thanks to the major shakeout the industry experienced following the 2008 financial crisis.
Many independent mortgage brokers, who once dominated the market, either went out of business or fled the industry, opening the way for community banks to reclaim that space.
Investors also have renewed appetites for mortgage debt right now so many community banks are underwriting mortgage loans and then selling them to the secondary market, where yields are attractive, bankers say.
Rockville Bank, for example, saw its mortgage volume double last year, as it originated $294 million in residential loans.
Farmington Bank, Simsbury Bank and other local lenders have seen similar growth rates.
Morgado said competition in Greater Hartford is intense but the Savings Bank of Danbury will be aggressive on its interest rates to score new business. The bank is offering 30-year mortgages at 3.375 percent interest, he said.
The bank also tries to differentiate itself by closing on mortgages loans within 30 days, which is faster than larger banks which can take months to finalize a deal.
“Being a community bank we have the ability to move quicker,” Morgado said.
The Savings Bank of Danbury offers a full suite of mortgage products ranging from jumbo and super jumbo loans to FHA and adjustable rate loans. The bank, which owns a mortgage company in Stamford, also participates in first-time home buyer programs, Morgado said.
The low interest rate environment has spurred a lot of refinance activity lately, Morgado added, which is where the bank has seen significant growth in recent years.
That is also spurring the bank to sell off some its mortgage loans into the secondary market to hedge against the risk of having long-term, low-interest loans on its books.
Holding those loans could squeeze the bank’s margins in a rising interest rate environment, a concern held by many community lenders which make the majority of their revenue from interest rate spreads.
At the end of the 2012, the Savings Bank of Danbury had $413 million in residential mortgage loans on its books, according to data from the Federal Deposit Insurance Corp.
