Mortgage Lenders Nervous About 2021 Profit Margin

Mortgage lenders are looking at the upcoming 2021 year with a high level of caution. They remain optimistic about the rest of 2020, but they have a few reasons to be apprehensive about the following year. The new rise in COVID-19 cases and uncertainty about how the economy will recover has put lenders on edge about their ability to close on future mortgage deals.

Fannie Mae conducted a Mortgage Lender Sentiment Survey in the fourth quarter of 2020 to determine how much faith mortgage lenders had in their upcoming profitability for 2021 as compared to 2020. Forty-eight percent of the mortgage lenders in the industry believed the profit margin would decrease over the next three months. Thirty-three percent of those lenders felt that the profit margin would stay the same, and only 19 percent saw hope in a profit margin rise.

The demand for new housing loans and refinance solutions remained high in the final quarter of 2020. In fact, GSE-eligible loans reached a new survey high, and government loans soared to a new high in the fourth quarter. Fannie Mae’s Senior Vice President remained optimistic about the mortgage industry’s future. He stated that MLSS results supported its ongoing strength.

Many mortgage lenders don’t have the same enthusiasm and positive outlook as the Senior VP, however. They are nervous because the United States is currently seeing an overwhelmingly high boost in COVID-19 cases. Economic relief efforts don’t seem to be going smoothly either. For those reasons, the lenders see a shaky future for new home purchases and refinance deals.

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