Countrywide’s Profits Fall Amid Higher Interest Rates

Countrywide Credit Industries Inc., the largest U.S. publicly traded mortgage lender, said fiscal first-quarter profit fell 19% as higher interest rates kept consumers from refinancing their home loans.

Net income for the Calabasas-based company fell to $83.5 million, or 72 cents a share, in the quarter ended May 31 from $103.4 million, or 88 cents, a year earlier. Revenue declined 2% to $528.2 million from $538.7 million.

Analysts expected earnings of 70 cents, according to a First Call/Thompson Financial survey.

The Federal Reserve, in an attempt to cool the economy, has raised interest rates six times in the past 13 months, making the financing of a home more costly. Since the end of 1998, the average rate on a 30-year mortgage has risen to 8.22% from 6.83%, according to Freddie Mac.

Countrywide said mortgage funding in the quarter fell 37% from a year earlier when record numbers of homeowners refinanced their mortgages. Reflecting the drop in mortgage funding, the company said loan origination fees in the quarter fell 43% to $84.3 million.

Earnings were buffeted by Countrywide’s emerging insurance operations. It acquired Balboa Life and Casualty Insurance, a home loan insurer, for $425 million in November. Net premium earnings in the quarter rose 11-fold to $62 million.