March 2026

In March, the effective cost of warehouse increased 0.16% and average overnight SOFR dipped slightly by 0.02%, widening the effective spread to SOFR to 0.18%. Average note rates fell to 6.08%, the lowest in years, compressing returns further, causing a negative warehouse carry. While average dwell time improved by two days, the benefit was not enough to offset higher costs, resulting in a net cost of warehouse of $29.17 per loan. Overall, March highlighted how quickly margin pressure can intensify when funding costs outpace improvements in operational efficiency.

At its March meeting, the Federal Reserve held the funds rate steady at 3.5% to 3.75%, extending its pause amid persistent inflation and heightened geopolitical uncertainty. Policymakers emphasized that elevated risks like rising energy prices warrant a cautious, data dependent stance. Looking ahead, markets continue to expect one or two rate cuts later in 2026, though timing remains highly dependent on upcoming inflation and labor data.

Managing Margin Pressure Through Precision and Speed 

Managing Margin Pressure Through Precision and Speed
March reinforced a familiar reality for IMBs: modest improvements in dwell time alone are no longer enough to protect profitability when funding costs rise and note rates soften. In this environment, lenders must focus on precision—optimizing funding decisions loan by loan, minimizing carry exposure, and eliminating friction across the warehouse lifecycle. OptiFunder helps originators do exactly that by automating allocation decisions, improving visibility into effective costs, and accelerating funding-through-paydown workflows. As spreads tighten and volatility persists, originators who win will be those who can move faster, see costs sooner, and act decisively to protect every basis point.

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