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How is Margin Compression Affecting the Mortgage Industry

How is Profit Margin Compression Affecting the Mortgage Industry?

Posted on July 5, 2018

2018 will not be a rosy year for mortgage executives. Over the last few years, the mortgage industry has revived the recession challenges but the profit margin compression still poses a big challenge to the executives. The interest rates have gone lower than expected and the market has not recovered from the loss it suffered at the time of recession.

Even though there has been a significant increase in the mortgage lenders, the profit margin is lower than what the mortgage executive need to sustain. A plethora of regulatory policies have been implemented to make the sustainability even more difficult.

There are multiple factors that are affecting the profit margins and leading to a compression in the same. Some of them being the regulatory changes and a substantial increase in the compliance costs. A lot of surveys have been conducted by government bodies to dig out the root causes of profit margin compression leading to the solvency of mortgage executives.

  • Regulatory Issue

    The mortgage industry was hard hit by the recession and has been hardly able to revive since then. It was the right step by the government to bring in more stringent policies to control the undesired inflammation in the profit margins that was being enjoyed by mortgage executives. A significant increase in due diligence and technology control over the mortgage workflow has led to a crushing fall in profit margins.

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