Popular Bank exits mortgage lending

Puerto Rico-based Popular Bank announced it is exiting home lending, the second institution to make the decision in a little over a month. 

The company said competitive pressure and the wish to focus on areas with greater revenue potential motivated their exit from the mortgage segment.  

“As part of our ongoing efforts to improve profitability, we decided to exit the U.S. residential mortgage origination business,” said Jorge Garcia, chief financial officer of parent company, Popular Inc., in its third-quarter earnings call on Thursday. 

“We don’t believe, given our funding profile and deposit branches in the U.S., that that’s a business that we really want to be in at this time,” he added, noting the decision would impact a unspecified number of employees. 

Popular serves customers in Florida, New Jersey and New York on the U.S. mainland. Along with its decision to cease mortgage originations, the bank also announced it would close four New York metropolitan area branches. 

The move comes as the company reported net income of $211 million in the most recent quarter across both mainland and Caribbean operations, with mortgage activity in its Puerto Rico business leading to an increase of $129 million in balance. 

How the mortgage industry is changing under current market conditions

The costs of mortgage lending under current housing market conditions has resulted in a changed business landscape with a steady stream of mergers and exits as companies re-evaluate their business strategies. 

Three years after market shifts first drove interest rates to more than double from early 2022 levels, several waves of consolidation have hit the mortgage industry, with the trend continuing well into 2025. Stubbornly sticky rates, compounded by housing affordability obstacles, left many nonbank lenders struggling with profitability and opting to merge. 

The challenges with offering mortgages, likewise, is driving some depository institutions to leave the segment altogether. Earlier this year, both Ally Financial and WaFd Bank announced they would eliminate mortgage units, followed by Blue Ridge Bankshares a few months later. 

Popular’s exit is the second such departure in a little over a month. In September, New Jersey’s Oceanfirst Bank made the same decision to exit but said it would continue offering its customers mortgage options through a new partnership with Embrace Home Loans.

On the other end, the merger-and-acquisition trend led Oklahoma’s Bank7 to grow its mortgage team in 2025 with the acquisitions of nonbank lender First American Mortgage.