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The strong demand by consumers gave mortgage lenders a more encouraging profitability outlook in the third quarter, according to Fannie Mae’s Mortgage Lender Sentiment Survey.
The survey displayed that more or less half (46%) of respondents expect profit margins to reduce in the next three months, an upgrade from 69% in the previous quarter. Meanwhile, 38% believe profits will hang about the same level, and 15% think profits will increase.
“There was a vague increased in profitability viewpoint of mortgage lenders from the previous quarter, even though more lenders than not carry on expecting profit margins to cut back within the months ahead,” Fannie Mae deputy chief economist Mark Palim said.
Palim noted that lenders’ prospects for purchase and refinance demand were assorted during the period.
“More lenders than not reported hope that purchase mortgage demand will carry on to grow up in the third quarter, despite the fact that the entire share expecting such increase fell to a large extent compared to the previous quarter,” he said.
“While, the refinance activity to continue to fade from the highs of the past year and a half was anticipated by over half of mortgage lenders – nonetheless, their outlook on likely refi volumes was enhanced compared to the prior quarter.”
The lenders who anticipate purchase demand to drop in the coming months cited high home prices and limited supply as the primary reasons for their bearish sentiment.
“The resolution by lenders to hugely cite amplified competition as their main distress regarding future profitability, the share citing personnel expenses for their diminished gross margin outlook amplified drastically, suggesting that mortgage lenders’ ability to capably manage their workforces will be critical to their bottom lines as competitive pressures remain intense,” Palim said.
Reference Source: MPA
