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Mortgage lenders face renewed layoff risk as rates stay higher
HousingWire reports the MBA says average net production profit fell to 25 bps in Q2 2026 from 89 bps in Q1 2021 amid flat volumes and historically compressed margins.
Mortgage lenders that hired earlier in 2026 are now facing additional pressure as a higher-for-longer rate environment and weaker refinance expectations reduce deal profitability, HousingWire reports. Analysts cited by HousingWire say the shift comes as 30-year fixed rates settled closer to 7% after earlier parts of the year saw rates in the low 6s and a brief refinance rally.
HousingWire reports Brett Ludden, managing director and head of mortgage solutions at Milliman, said some lenders have been telling him they can handle substantially more volume without adding headcount, pointing to changes in staffing needs. He linked the change in lender expectations to the U.S. war in Iran affecting consumer prices and the Federal Reserve keeping its benchmark rate higher for longer, reducing optimism that rates would drop later in the year.
HousingWire also notes that margin compression has been persistent. It cites Mortgage Bankers Association data showing average net production profit of 25 basis points in the second quarter of 2026, compared with a peak of 89 bps in the first quarter of 2021, with lenders unable to rely on volume growth to offset lower profits per loan.
The story says loan counts are projected to rise only modestly, with the MBA expecting 5.45 million loans in 2025, 5.69 million in 2026, then roughly flat levels around 5.67 million in 2027 and 2028. HousingWire reports MBA Vice President of Industry Analysis Marina Walsh said the industry is experiencing an unusually long stretch of compressed margins, and that employment would be constrained given flat volume expectations.