Industry Cracks $7 Trillion Mark.(mortgages)

At year-end, the available pool of residential servicing rights cracked the $7 trillion mark, according to figures compiled by Mortgage Servicing News.

Moreover, the dollar volume of outstanding loans increased by 12% from year-end 2002 to year-end 2003, MSN found.

From year-end 2001 to year-end 2002, servicing rights increased by even more - by 13.6%.

In normal times housing debt grows by 8% or so a year, but the past two years have been anything but normal for mortgage bankers, servicers, and the customers they serve.

The lowest interest rates in 40 years have spurred record production, driven by record refinancings but also by a red-hot home purchase market.

Until the refi boom commenced in early 2002, consolidation among mortgage servicers was rampant. Consolidation has slowed somewhat since then, but is expected to pick up again once interest rates rise.

But when exactly rates will rise, and by how much, is anyone's guess. Also, continued low interest rates are making it difficult for many top-ranked servicers to maintain the hyper-growth in receivables they enjoyed before the refi boom started. (Also, the bulk market for servicing rights has dried up.)