Mortgage lenders have posted a sixth consecutive quarter of negative profit forecasts according to a new report from Fannie Mae
The main reason for the squeeze is increased competition in the mortgage market; forcing the Mortgage Lender Sentiment Survey to an all-time low equal to that of Q4 2016.
Market trend changes were cited by lenders as the second highest reason for their negative forecast in Q1 2018 and more lenders say there’s lower consumer demand for purchase and refinance loans.
The net share of lenders reporting demand growth for purchase loans over the past three months turned negative for the first time since the first quarter of 2014 and the net share of lenders expecting increased demand over the next three months was the lowest for any first quarter in the survey's history.
For refinance loans, there was an increase in the net share of lenders reporting demand growth over the past three months was lower. For the next three months, there was the worst outlook of any quarter since Q4 2016.
"Lenders have faced an increasingly difficult market environment, as they report the most sluggish refinance demand expectations in more than a year, the most anemic purchase demand outlook on record for any first quarter, and the worst profit margin outlook in the survey's history," said Doug Duncan, senior vice president and chief economist at Fannie Mae.
He added that more lenders eased lending standards than tightened them again this quarter but that the net share of lenders reporting easing credit standards declined for the first time in five quarters to the lowest level in a year.
