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Pennymac Q2 profit falls 84% as higher rates cut mortgage production
Lock volume dropped 18% to $31.5 billion, and Pennymac confirmed layoffs alongside closing an office in Franklin, Tennessee.
PennyMac Financial Services reported second-quarter 2026 net income of $22 million, down 84% from a year earlier, as higher interest rates reduced mortgage production volume and weighed on profitability, HousingWire reported. The company said its adjusted return on equity fell to 7% from 13% a year earlier, and annualized return on equity declined to 2% from 14%.
PennyMac also disclosed that lock volume fell 18% to $31.5 billion, and servicing pretax income declined to $22 million. For the quarter, it earned 41 cents per diluted share, compared with $2.54 per share in Q2 2025.
Pennymac confirmed layoffs, and said it closed its office in Franklin, Tennessee, a month earlier when staff in its consumer direct lending operations were laid off. In a statement to HousingWire, the company said it eliminated select positions within its lending and mortgage fulfillment operations as it aligned its operations accordingly.
In addition to the income decline, the company reported total net revenue rose 12% year over year to $497 million, while adjusted net income was $74 million, or $1.39 per diluted share, down from $124 million, or $2.31 per share, a year earlier. Chairman and CEO David Spector said the results fell short of expectations due to higher interest rates, while Pennymac is realigning its cost structure and funding major technology initiatives in AI and automation.