Mortgage Lenders Approach 2018 with Negative Outlook on Profit Margin, Refinance Activity

Mortgage Lender Sentiment Survey

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," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "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. More lenders reported a pullback in refinance demand from the prior quarter than those who saw an increase, continuing the trend that started at the beginning of the year. This finding is consistent with our forecast for a steady drop in refinance originations this year. With the outlook calling for rising interest rates and continued tight housing inventory constraining home sales, increased competition will likely continue to drive lenders' mortgage business strategies."

On this webpage you will find a news release with highlights from the survey results, the Q4 2017 data summary highlighting key attitudinal indicators, a detailed research report, the questionnaire used for the Q4 2017 survey, and FAQs providing additional information about the survey.

Downloads and Related Links
Q4 2017 News Release
Q4 2017 Detailed Research Report