In January, the effective cost of warehouse rose to 6.17%, while overnight SOFR slipped to 3.67%, widening the spread to 2.50%. Note rates held at 6.25% as average dwell time increased to 19 days. Warehouse carry softened to 0.08%, and net warehouse spread per loan fell to about $15. Alongside these pressures, lower outstanding balances also drove higher non-use fees for many lenders, adding another layer of strain. Despite mixed shifts across metrics, higher costs and dwell times underscored how tight margins remain as lenders move through the early months of2026.
Warehouse Lending Trends (Month to Month) |
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| December 2025 | January 2026 | |
| Effective Cost of Warehouse | 6.08% (-0.16%) | 6.17% (+0.09%) |
| Average Overnight SOFR | 3.78% (-0.22%) | 3.67%(-0.11%) |
| Effective Spread to Overnight SOFR | 2.30% (0.06%) | 2.50% (+0.20%) |
| Average Note Rate | 6.25% (+0.01%) | 6.25% (+/-0.00%) |
| Warehouse Carry | 0.17% (+0.17%) | 0.08%(-0.09%) |
| Average Dwell Time | 17 days (-1 day) | 19 days (+2days |
| Net Warehouse Spread (per loan) | $28.10 (+$28.80) |
$14.78 (-$13.32) |
The Fed’s decision to hold rates steady in January kept the federal funds rate at 3.5% to 3.75%, helping mortgage markets settle after prolonged volatility. Thirty‑year fixed rates remained in the low‑6% range, supported by easing Treasury yields and cooling inflation. With a cautious wait‑and‑see stance, analysts expect limited near‑term movement ahead of a potential rate cut later in 2026. As the March FOMC meeting approaches, lenders continue to operate in an environment where affordability has improved modestly, but tight margins still define the landscape.
With 2026 just beginning, IMBs continue to face a market defined by margin compression. Net warehouse spread per loan is under pressure, operational costs remain elevated, and the pace of market shifts demands a level of responsiveness that traditional processes simply can’t sustain. In this market, success hinges on the ability to automatically optimize every decision, eliminate friction, and capture efficiencies wherever they exist. For originators looking to protect profitability in an environment where every basis point counts, OptiFunder delivers the automation and intelligence needed to scale even as margins stay tight.
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