Mortgage industry conference debates growth, servicing and privacy lead changes

Mortgage Market Snapshot: Lenders pause on expansion as rates, servicing and privacy rules reshape the landscape

Bottom line: Lenders at a recent industry conference signaled caution about growing their branch networks and hiring new loan officers, while economic data and Treasury moves pushed longer-term yields lower and mortgage rates to fresh lows for the year. Lawmakers are also moving on consumer privacy for homebuyer leads, and servicers and lenders are debating whether to keep or sell loan servicing rights.

Why expansion is stalling

At a mortgage industry meeting in Jackson, Mississippi, multiple lenders reported that they are turning down more expansion plans than before. Deep reviews of loan officers and branch profitability show few clear paths to profitable growth. New players are being told that investors are unlikely to pay premiums for loans that may prepay soon, making aggressive expansion risky.

Servicing and early-payoff issues

Servicing strategy was a hot topic. Some companies are choosing to keep loan servicing, others are selling it. Industry analysis this month focused on why servicing draws so much attention, and lenders discussed tools and contract terms used to limit losses from early payoffs. There was also discussion of how servicer recapture strategies can affect how mortgage coupons trade in the market.

Privacy rules for buyer leads

Federal changes proposed for so-called trigger leads would move those marketing lists to an opt-in system and require a study of text-message solicitations. Lawmakers and market participants are weighing the possible effects on credit bureau revenues and how competition among mortgage providers could change if the rule is adopted.

Economic and market moves that matter

Inflation data showed the Consumer Price Index rose 0.4% in August, a touch above expectations, and the yearly CPI number edged up to 2.9%. Core CPI excluding food and energy rose 0.3% for the month and held steady year over year at 3.1%. Food, shelter, and transportation services contributed to the monthly gain. While inflation remains above the central bank’s preferred personal consumption measure target, the jump is not seen by many as enough to rule out rate cuts later in the year.

Weekly initial jobless claims spiked by 27,000 to 263,000, the highest weekly level since late 2021, and continuing claims were roughly unchanged at 1.94 million. Together, persistent inflation and a softer jobs series are raising questions about growth and whether future rate moves will be cuts and when they might happen.

Treasury auctions and yield moves

Market demand at recent long-term Treasury reopenings was mixed. A 30-year reopening was viewed as fair, while a 10-year sale was well received. The 10-year yield dipped to around 4.00% and the 2-year traded near 3.50% at times, while the long bond stayed around recent highs into the afternoon. Ten-year yields have fallen notably so far in September, flattening parts of the curve and sending mortgage-backed securities mixed signals.

Mortgage rate and product updates

Primary market surveys reported that the 30-year conventional mortgage rate fell to about 6.35% and the 15-year to about 5.50%, the lowest marks since early October last year. Despite the drop, rates remain above last year’s levels. Mortgage credit availability showed a small monthly improvement, but overall lending conditions remain tighter than a year ago.

Other industry highlights

• Industry events showcased alternative housing ideas and emphasized the role of factory-built and manufactured housing as a cost-sensitive option in tight markets.
• Vendors and tech providers promoted tools that automate loan and title workflows, digital servicing platforms for manufactured housing, and solutions that combine loan origination, servicing and default tools on a single tech stack.
• Several webinars and showcases were announced to help lenders digitize construction-loan processes and other specialty products.
• New product announcements included second-lien offerings designed to give homeowners cash while preserving the first mortgage, with specific borrower requirements tied to occupancy and payment obligations.
• Tools aimed at identifying refinance-ready borrowers are being marketed to loan officers, drawing on loan and property transaction databases going back several years.

What this means for lenders and borrowers

Lenders are moving cautiously on growth. Borrowers may see slightly better pricing as longer yields retreat, but market access and investor appetites still shape which products are available and how quickly loans can close. Privacy rule changes could reduce the pool of readily purchasable buyer leads for originators, increasing the value of direct marketing and client relationships.

Key takeaways: Lenders are trimming expansion plans, servicing choices remain strategic, inflation and jobs data are sending mixed signals to markets, mortgage rates eased to recent lows, and privacy and technology shifts are reshaping marketing and operations across the industry.

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