Huge Forbearance Decline; Rate Reckoning; Lenders’ Profit Outlook

With interest rates expected to rise and most homeowners who could benefit from refinancing having done so, mortgage bankers are not expecting the sometimes record profits of the last year or so to continue. Fannie Mae’s third quarter Mortgage Lender Sentiment Survey (MLSS) found just short of a majority of respondents expecting their profit margins to decline over the next three months , although that has also been the primary sentiment for the past three quarters. The current survey found 46 percent of lenders expecting a decrease in profits, down from 69 percent in the prior survey. Thirty-eight percent believe their profits will be unchanged and 15 percent expect them to be higher. Those expecting slimmer margins cited increased competition and changing market conditions for their pessimism
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