The profit outlook for mortgage lenders fell for the ninth consecutive quarter in the final three months of 2018 because of a decline in demand for loans to buy homes and refinance existing mortgages, according to a survey by Fannie Mae.
Fannie Mae’s Q4 2018 Mortgage Lender Sentiment Survey also found that the outlook for profit among lenders in the fourth quarter reached an all-time survey low across all loan types.
Survey respondents cited competition from other lenders as the top reason for their pessimism. Regarding demand for purchase mortgages, lenders reporting growth for the prior quarter reached the lowest reading for any fourth quarter in the survey's history. Lenders also reported downbeat mortgage demand growth expectations.
“Stressful conditions continue to hang over the mortgage industry. Lenders are reporting the lowest purchase mortgage demand expectations across all loans types and the worst refinance demand expectations for GSE-eligible loans in the survey’s five-year history,” Fannie Mae Chief
Economist Doug Duncan stated in a release.
“Rising mortgage rates and lean inventory amid solid home price appreciation have discouraged both first-time and trade-up homebuyers. However, mortgage rates have shown signs of stabilization, and annual home price gains have slowed from the red-hot pace seen earlier this year,” Duncan added. “While 2018 is likely to end up a disappointing year for the housing and mortgage industries, continued strength in demographics and the labor market offers hope that conditions should stabilize and may even improve next year.”