After
In the first quarter, 52% of industry executives predicted their upcoming margins will shrink, compared to
Contrarily, 15% of respondents thought profit margins will increase, down quarterly from 19% and 51% annually. The remaining 33% believed profits will remain about where they are today.
As a result the net share for lenders’ margin sentiment fell for the second quarter in a row to -37%. It set a record low point for the survey, beating out the fourth quarter of 2018’s -34%. The two quarter negative streak came after riding high throughout the preceding three quarters. Lender competition was the most cited reason for the expectations of declining margins, followed by the shift to a more purchase-heavy market.
“With a modestly higher interest rate forecast, we expect refinance activity to gradually wane,” Fannie Mae Chief Economist Doug Duncan said in the report. “
A 65% net share of lenders forecast
“In the longer term, continued upward pressures on interest rates would likely dampen home sales and mortgage originations as lenders raise mortgage rates,” Duncan continued. “This might push lenders to reduce their production capabilities.”