Will Lender Profits Decrease?

October 5, 2021
Fannie Mae reports that 46% of mortgage lenders predict a drop in profits, a 23% improvement from the previous quarter.


According to Fannie Mae, 46% of mortgage lenders believe profit margins will decrease in the next three months, an improvement from 69% in the prior quarter. But 38% believe profits will remain the same and 15% believe profits will increase. Increased competition and changing market conditions were the top reasons cited for the pessimism, while GSE pricing and policies and strong consumer demand were the top reasons given among lenders with a more positive profitability outlook. Additionally, across all loan types, more lenders this quarter reported reduced consumer demand over the previous three months for purchase mortgages but improved demand for refinance mortgages.  Still, the reported change in mortgage demand over the previous three months, as well as expectations for the change in demand over the next three months, remained positive on net for purchase mortgages but still slightly negative for refinance mortgages. “Mortgage lenders appear to have adopted a more neutral posture, reporting to us via the MLSS mixed expectations for purchase and refinance mortgage demand over the next three months," said Fannie Mae Vice President and Deputy Chief Economist Mark Palim.  “A plurality of mortgage lenders expects refinance activity to continue to wane from the highs of the past year and a half – even so, their outlook on likely refi volumes was improved compared to the prior quarter,” Palim adds.

Source: Rise and Shred