Post-Election Surge in Mortgage Rates Paints Gloomy Picture for Lenders
December 16, 2016
Mortgage lender expectations for near-term mortgage demand plummeted amid the rapid rise in interest rates following the U.S. presidential election, according to Fannie Mae’s fourth quarter 2016 Mortgage Lender Sentiment Survey®. Conducted after the election, the survey results show that the net share of lenders expecting an increase in purchase mortgage demand over the next three months was at or near survey lows across the different loan types – with a majority of lenders citing “mortgage rates are not favorable” for their worsening near-term outlook. Additionally, for refinance mortgage demand, the net share of lenders reporting growth expectations over the next three months fell to a survey low across all loan types. On net, after three straight quarters of a positive profit margin outlook, lenders reported a significant negative profit margin outlook, reaching a new survey low.
"The survey captured lenders’ bearish sentiment driven by the recent surge in mortgage rates – a level of bearishness last seen in the summer of 2013 during the taper tantrum," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The sudden surge in mortgage rates weighed on expected future purchase and refinance volume. Downbeat production expectations suppressed lenders’ profit margin outlook to the worst showing in the survey’s short history. Rates could slowly unwind in coming quarters, reversing some of the expected decline in volume. However, the potential normalization of interest rates after a sustained period of strong refinancing volumes presents the biggest business challenge facing mortgage lenders in some time."
On this webpage you will find a news release with highlights from the survey results, the Q4 2016 data summary highlighting key attitudinal indicators, a detailed research report, the questionnaire used for the Q4 2016 survey, and FAQs providing additional information about the survey.
Downloads and Related Links
Q4 2016 News Release
Q4 2016 Mortgage Lender Sentiment Survey Detailed Research Report (PDF)
Mortgage Lender Sentiment Survey Archive
Click here for an archived list of Fannie Mae's Mortgage Lender Sentiment Survey results.