Yesterday’s TMC Lender Networking Call (record number of attendees) focused on one of the only things everyone in our industry is united around - profitability. How profitable has our industry as a whole been these last few years? How does profitability differ by peer group? What are the drivers (and detractors) of profitability? What are some of the recent trends? Will our industry be more or less profitable in 2017?
I had a chance to kick off the call having a discussion with one of my favorite people, Marina Walsh from the MBA. Marina is MBA’s VP of Industry Analysis, and has the unique perspective of observing and analyzing our industry nationally through all kinds of cool statistics and peer-group data. While Marina is understandably more guarded in her predictions, I’m not. :-) Here’s some of my thoughts on how 2017 will play out.
The industry will write more purchase loan business than any year since 2006, with purchase originations up almost 20% from 2016. Total originations will come in at $1.8 trillion, just shy of this year’s expected $1.9 trillion total.
Rates will not shoot up. Global turmoil and a very soft underbelly to the US economy will continue to make US fixed income assets like mortgage-backed securities a good investment, keeping 30 year rates in the low to mid 4’s.
Nothing will happen with the GSE’s, who will continue to produce a lot of revenue for a government that needs it.
While the oversight of CFPB will change, a significant cybersecurity attack will change their focus.
Investment in technology will eat away at lenders 2017 proftability as they invest in the future. Picking the right technology partners is vitally important for lenders right now.
M&A will be rampant, with medium to large-sized ($1-5 billion/year) IMB’s continuing to add market share.
TMC - Chief Operating Officer