Countrywide Financial Corp. on Monday revised its earnings estimate for last year after higher interest rates eroded demand for refinancing in the fourth quarter.
The Calabasas-based company said earnings probably were $12.30 to $12.45 a share, compared with a previously forecast range of $12 to $13.50. The stock fell as much as 4.2% during the day.
U.S. mortgage lenders had a 47% drop in volume in the fourth quarter from a record high in the prior quarter as rates increased, according to the Mortgage Bankers Assn. in Washington. Lending volume fell to $564 billion in the last three months of 2003, the lowest of the year, after reaching a record $1.06 trillion in the third quarter.
"As anticipated, refinance activity declined during the quarter due to higher mortgage rates," Stanford L. Kurland, Countrywide's president and chief operating officer, said in a statement.
The average rate for a 30-year fixed mortgage was 5.9% in the fourth quarter, compared with a low of 5.5% in the second quarter, the bankers association said. The market share for refinanced loans fell to 49% from 68% in the third quarter.
Countrywide, the third-largest U.S. mortgage lender, forecast that 2004 earnings would be $9 to $12 a share, the same as an earlier prediction. Analysts on average expected the company to earn $13.05 a share in 2003 and $10.25 in 2004, according to a Thomson Financial poll.
The company will report earnings Jan. 27. Countrywide had the third-highest origination volume in the third quarter, at $125.9 billion, following Wells Fargo & Co. and Washington Mutual Inc.
For December, Countrywide lent $25.1 billion, a 13% increase from the previous month, the company said Monday. The volume was down 29% from the $35.2 billion lent in the year-earlier month.
Countrywide shares fell 86 cents to $71.18 on the New York Stock Exchange.