A combination of mortgage volatility and extreme margin compression forced it to suspend retail operations while accepting mortgage locks through the end of the month.
The decision to shut down comes on the heels of additional mortgage volatility driven by the macro economy, Homestar said in a statement.
Over the past two months, the 10-year Treasury yield rose almost 100 basis points (bps) after a period of relative stability at already high mortgage rates. As a direct result, mortgage rates recently hit 8%, and, as an industry, lock volume dropped 20% from August to September, Homestar said, citing industry reports.
“The financial losses for mortgage lenders continue to mount due to continued market compression leading to lower margins and higher interest rates leading to lower volume,” Wes Hunt, founder and CEO of Homestar, said in a statement. “As we head into a period of historically seasonal lows, for protection, with no end in sight for the margin compression or realistic prospects of lower rates, I have decided not to incur further financial risk over the coming months.”