Portfolio Lender


DEFINITION of 'Portfolio Lender'

A company that not only originates mortgage loans, but also holds a portfolio of their loans instead of selling them off in the secondary market. A portfolio lender makes money off the fees for originating the mortgages and also seeks to make profits off the spread (difference) between interest-earning assets and the interest paid on deposits in their mortgage portfolio.

BREAKING DOWN 'Portfolio Lender'

Many mortgage lenders avoid the risks of holding mortgages, only profiting from origination fees and then quickly selling off the mortgages to other financial institutions. There are pros and cons to both methods. Companies who profit off mortgage origination experience less risk and likely a more stable profit stream, while portfolio lenders have a chance to experience more upside on their portfolio, but also more risk.

  1. Cost Of Capital

    The required return necessary to make a capital budgeting project, ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Mortgage Banker

    A company, individual or institution that originates mortgages. ...
  4. Spread

    1. The difference between the bid and the ask price of a security ...
  5. Asset Management

    1. The management of a client's investments by a financial services ...
  6. Temporary Lender

    A mortgage lender that sells the loans it originates into the ...
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