Instead, mortgage rates jumped 2.5 percentage pointsduring the first three months of the year, which was the biggest quarterlyclimb in 28 years. Rates have continued to spike, with the 30-year fixed exceeding8% in October 2023, a rate not seen since 2000! The MBA expects rates to bearound 5.5% by the end of 2024.

Housing Wire pointed out that after two record-settingyears of mortgage origination volume, the mortgage industry continuedcontracting sharply. They estimate that total origination volume in 2023 was$1.65 trillion down from $2.25 trillion in 2022 and $4.5 trillion in 2021. Bycomparison, the MBA is forecasting total volume of about $2 trillion in 2024,with gradual increases over the next two years. With higher rates and a slowinghousing market, margin compression is accelerating for lenders and servicers.

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• A recentsurvey showed that the cost to originate a loan is almost $12,000! According toMBA’s Quarterly Performance Report (QPR), net production income averaged 54basis points since 2008. This production margin reached a record 203 basispoints in the third quarter of 2020, as lenders were swamped with refinancevolume. In the past three quarters, it has dropped below this historicalaverage. At under 5 basis points in first-quarter 2023, and at a loss of 5basis points in third-quarter 2023, the industry is now struggling with theperfect storm of lower volume, lower revenues, and higher costs per loan‍

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• The industry had to dramaticallyscale up in 2020 and 2021 only to have to reverse those decisions in 2022 and2023.‍