Stocks are lower this morning as oil prices and bond yields continue to climb. Bonds and MBS are down.
The week ahead is relatively data-light. The main numbers will be housing starts, pending home sales, consumer sentiment and the index of leading economic indicators. We will also get the FOMC minutes on Wednesday. Given the unusual dissent over language, the minutes should be interesting.
Average independent mortgage bank profits were flat in the first quarter, according to the MBA. “Average production profits in the first quarter of 2026 remained relatively flat at 16 basis points, despite a decline in production volume from the previous quarter,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Production costs grew by close to $800 per loan, but increases in production revenues offset these additional costs.”
Added Walsh, “Servicing net income improved during the first quarter, as markdowns on mortgage servicing rights slowed. Combining both production and servicing business lines, 75 percent of lenders were profitable in the first quarter. Still, disparities between the top and bottom performers remain wide.”
Industrial production rose 0.7% MOM and 1.4% YOY, according to the Federal Reserve. Manufacturing production increased 0.6% MOM and 1.3% YOY. Capacity Utilization increased to 76.1%.
Mortgage lock activity declined in April after a strong start to the year. “April looks more like a cooling from a strong first quarter than a real weakening in borrower demand,” said Mike Vough, senior vice president of corporate strategy at Optimal Blue. “Purchase activity held up well despite rate pressure, while refinance volume reacted more quickly to recent rate moves. That split reinforces how rate-sensitive borrowers remain, even as the spring purchase market continues to show resilience.”
“In a higher-rate environment, lenders are paying close attention to where execution value is showing up,” Vough added. “The move toward agency MBS execution, combined with higher MSR values and increased investor participation, continues to prove that lenders need to evaluate all potential execution options to maximize profitability.”
