July 2026

In July, the effective cost of warehouse remained essentially flat at 6.04%, while average overnight SOFR declined slightly to 3.62%. The effective spread to SOFR widened to 2.42%, and average note rates increased to 6.46%, helping boost warehouse carry to 0.42%. Average dwell time lengthened by one day to 18 days, but the improvement in pricing more than offset the added funding duration. As a result, net warehouse spread per loan increased to $73.50, up more than $9 from June and marking another month of strengthening economics for originators.

At its July 28-29 meeting, the Federal Reserve held the federal funds rate steady at 3.50% to 3.75%, continuing its cautious, data-dependent approach as policymakers balance persistent inflation concerns against slower economic growth. Notably, several Fed officials favored a more restrictive stance, highlighting ongoing concerns that inflation remains above the central bank’s 2% target. Mortgage rates continued to trend in the mid-6% range throughout July, and most analysts expect rates to remain relatively stable through 2026 unless inflation data shows more meaningful improvement. For lenders, the current environment points to continued rate stability, but volatility risks remain elevated as markets assess the likelihood of future Fed action.

While improved warehouse carry and higher net warehouse spread per loan are welcome signs for the industry, profitability gains can quickly erode when operational inefficiencies persist. As dwell times begin to creep higher, lenders have an opportunity to focus on accelerating funding cycles, optimizing line utilization, and eliminating manual bottlenecks across the warehouse process. Genesis by OptiFunder helps originators maximize warehouse performance by continuously optimizing funding decisions, improving visibility across lending relationships, and reducing friction between stakeholders.