Mortgage lenders manufacture loans, with production running along two main assembly lines: purchases and refinances.
The mortgage rate environment largely determines aggregate demand for either, relative to the universe of existing mortgages and secondary factors driving individual borrower needs.
In the wake of the COVID-19 pandemic, the mortgage industry has entered an era of structurally lower refinance demand due to mortgage rate lock-in effects and persistently elevated mortgage rates, compared to levels observed over the past decade.
“It’s not an easy market, but it is one lenders have already been adapting to,” says Mike Vough, senior vice president of corporate strategy at Optimal Blue, a hedging analytics and technology provider.
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