Fitch Ratings has revised its outlook for the mortgage sector from deteriorating to improving, due to forecasts of lower mortgage rates leading to higher origination volumes.
The agency anticipates recapture opportunities through refinances will offset losses from mortgage servicing rights amortizations and write-downs, which is critical for companies heavily exposed to these rights.
Fitch expects an increase in gain-on-sale margins driven by reduced industry capacity, given the significant decline in employee headcounts between April 2021 and July 2024.
While macroeconomic conditions such as rising unemployment may pose challenges, high home equity levels could offer assistance to borrowers struggling with delinquencies.
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