Mortgage lenders again reported a negative profit margin outlook for the next three months, citing competition as the primary reason and continuing a quarterly trend beginning the same time last year, according to Fannie Mae’s Q4 2017 Mortgage Lender Sentiment Survey.
On net, the share of lenders who said “competition from other lenders” was the top driver behind their negative outlook reached another new survey high for the fourth consecutive quarter. Other reported factors include consumer demand, staffing and market trend changes. Additionally, the net share of lenders who expect to see growth in refinance mortgage demand over the next three months fell to the lowest reading in a year across all loan types (GSE eligible, non-GSE eligible and government). More lenders also reported declining refinance mortgage demand over the prior three months, marking four consecutive quarterly drops.
“Key trends have persisted throughout this year,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a statement. “Lenders who see declining profits outweighed those noting improvements in the bottom line for the fifth consecutive quarter. Three-fourths of those seeing deteriorating profits cite competition as the most important reason – a survey high – compared with only about one-third two years ago. This is not surprising given that refinance volume continues to shrink.”
Some mortgage lender survey highlights include:
- The net share of lenders reporting demand growth over the prior three months has fallen for all loan types when compared with Q4 2016, Q4 2015 and Q4 2014, reaching the lowest reading for any fourth quarter over the past three years.
- However, the net share of lenders expecting increased demand over the next three months remains relatively stable for the fourth quarter over the past three years.
- On net, more lenders reported declining demand over the prior three months, continuing the trend that started in Q1 2017.
- For the next three months, the net share of lenders expecting growth in demand for refinance mortgages dropped from last quarter (Q3 2017) across all loan types, reaching the worst outlook in a year.
