Mortgage lenders say higher rates, volatility cloud Q2 outlook

"Most major mortgage lenders posted solid Q1 2026 results, helped by rates roughly 50 bps below current levels. But Q2 expectations softened as volatility rose, refinances increased and purchases slowed. MSR valuations shifted, while more lenders emphasized HELOCs, pricing discipline and cost savings."

"A consistent theme emerged from the first-quarter 2026 earnings season: higher mortgage rates and macroeconomic volatility are dampening second-quarter expectations. Several large lenders remained profitable during the quarter, benefiting from mortgage rates that were roughly 50 basis points lower than current levels while they continued to invest heavily in artificial intelligence and other technology. But other lenders are still burning cash, and the recent shift in the macro backdrop is creating fresh challenges heading into the second quarter."

"Refinance activity surged across the industry, while purchase volumes were flat or lower as elevated rates continued to weigh on affordability. Large servicing portfolios helped generate fee income, but swings in mortgage servicing rights (MSR) valuations introduced significant earnings volatility. HousingWires analysis includes Rocket Companies, UWM Holdings, PennyMac Financial, loanDepot, Better Home & Finance, Rithm Capital (Newrez), JPMorgan Chase and Wells Fargo."

"Rocket posted its strongest profit in four years and guided Q2 2026 adjusted revenue to a range of $2.7 billion to $2.9 billion. That compares to the $2.82 billion it reported in Q1, signaling a more cautious outlook despite its dominant market position. Obviously, what happened later in the quarter is that a major conflict in the Middle East exploded, CEO Varun Krishna told analysts. With the war, oil prices went up, inflation pressure increased, and then rates moved up."

Major mortgage lenders posted solid Q1 2026 results supported by mortgage rates about 50 basis points below current levels. Q2 expectations softened as volatility increased, refinances rose, and purchase volumes flattened or declined due to affordability pressures. Servicing portfolios generated fee income, but changes in mortgage servicing rights valuations created significant earnings volatility. Lenders adjusted strategies by emphasizing HELOCs, maintaining pricing discipline, and pursuing cost savings. Several firms remained profitable while continuing heavy investment in artificial intelligence and other technology. Rocket Companies reported its strongest profit in four years and guided Q2 adjusted revenue with a more cautious outlook after macro conditions shifted.

Read at www.housingwire.com