Banks are adjusting to lower levels of mortgage originations, but are optimistic about mortgage lending in 2006, according to a survey by America's Community Bankers.

"While other players come and go, these community banks are in the mortgage business to stay," said Debra Cope, an ACB senior vice president. "Community banks are making an array of residential loan products available to consumers, expanding online mortgage services and capturing significant jumbo loan business," she said.

While expectations of increased volume are lower in all categories, optimism remains among lenders, Cope said. In the single-family loan category, 41 percent expect to increase their total dollar volume of loans originated, down from 48 percent in the 2005 survey. But 37 percent anticipated stability in single-family originations, up from 31 percent the previous survey.

Lenders remained relatively optimistic about dollar volume of home equity loans and commercial real estate loans. Ninety percent of survey participants expect to do as much or more home equity business in 2006, compared with 97 percent in the previous survey. Ninety-two percent foresee doing as much or more commercial real estate lending in 2006.

The survey found that for the first time in several years purchase loans accounted for a majority of originations (53 percent versus 47 percent for financings). Twelve percent of loans went to first time homebuyers, about the same as previous years. Sales into the secondary market as a percentage of originations remained stable in 2005, with 34 percent sold, the same as the previous year. However, 67 percent of banks were active sellers in the secondary market in 2005, down slightly from 2004. One-third retained all loans in portfolio.

As a percent of originations, banks sold a greater percentage of their home loans to conduits/wholesalers (14 percent), followed by Freddie Mac and Fannie Mae (7 percent each), the Federal Home Loan Banks (4 percent) and other financial institutions (1 percent). The most often used conduits were identified by survey participants as Countrywide, CitiMortgage, Washington Mutual, SunTrust and Wells Fargo.