bivey@imfpubs.com
It would appear the refi-and-profit party is just about over. Right?
Of the 225 mortgage executives who responded to Fannie Mae’s latest lender sentiment survey, 69% said they expect profit margins to drop from the second to the third quarter. A scant 11% predicted margins would improve.
Doug Duncan, senior vice president and chief economist at Fannie, said, “This quarter, the largest net percentage of lenders in the survey’s seven-year history are expecting a decrease in their profit margin outlook. This is the third quarterly decline from the lender profitability highs of 2020.”
Once again, the primary reason cited for lower profit margins was competition from other lenders and market trends.
Demand for purchase mortgages is increasing but is nowhere near levels sufficient to make up for the drop in refis. Also, purchase loans aren’t nearly as profitable as refis.