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Mortgage Lender Sentiment Survey

Reported Mortgage Demand Falls to Three-Year Low, Fueling Lenders’ Negative Profit Margin Outlook

June 12, 2018

Mortgage lenders reported a net negative profit margin outlook for the seventh consecutive quarter, as rising home prices and tight housing supply continue to put a squeeze on mortgage demand, according to Fannie Mae's Q2 2018 Mortgage Lender Sentiment Survey®. When asked about consumer demand for GSE eligible and government loans, the net share of lenders reporting growth in the past three months – as well as the net share reporting growth expectations looking ahead the next three months – dropped to the lowest reading for any second-quarter period within the past three years. Demand for refinance mortgages fared no better amid rising mortgage rates. On net, more lenders reported declining refinance demand over the prior three months, reaching the lowest level since Q2 2014. Additionally, those who expect a pickup in refinance demand in the next three months continued to trend negative on net, remaining near the survey’s lowest readings within the past three years.

Lenders' net profit margin outlook has stayed negative for seven consecutive quarters

"Lenders remain bearish this quarter as they continue to face headwinds from rising mortgage rates, tight supply, and strong home price appreciation, which have drastically reduced refinance activity and restrained home purchase affordability," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "These factors have combined to squeeze mortgage origination volumes and have increased competitive pressures. Increased competitiveness will likely persist as a top driver of lenders’ mortgage business strategy. We expect this will prompt businesses to turn to cost-cutting as a means of managing their bottom lines, with payroll reduction likely to assume a more prominent role in future belt-tightening efforts."

On this webpage you will find a news release with highlights from the survey results, the Q2 2018 data summary highlighting key attitudinal indicators, a detailed research report, the questionnaire used for the Q2 2018 survey, and FAQs providing additional information about the survey.

Downloads and Related Links

Q2 2018 News Release
Q2 2018 Detailed Research Report