May 2026

Monthly Warehouse Lending Report

In May, the effective cost of warehouse increased modestly to 6.26% as overnight SOFR declined to 3.59%, widening the effective spread to 2.67%. Average note rates edged higher to 6.27%, largely offsetting funding pressure, while warehouse carry remained essentially flat at 0.01%. Dwell time ticked up by one day to 16 days, reflecting slightly slower cycle times. Net warehouse spread per loan narrowed to roughly $1.50, reinforcing that profitability remains compressed despite relatively stable funding and pricing conditions.

The Federal Reserve continued its cautious stance last month, holding the federal funds rate steady as policymakers weighed persistent inflation pressures against signs of moderating growth. Markets are increasingly focused on the Fed’s June 17–18 FOMC meeting, where expectations for a potential late‑summer cut remain data‑dependent. For lenders, the environment remains defined by short‑term rate stability paired with longer‑term uncertainty around the pace and timing of any easing cycle.

Precision Matters in a Thin Margin Market

May’s data reinforces a familiar reality for IMBs: modest rate movements alone are not enough to materially improve profitability. With warehouse carry effectively flat and net spread per loan hovering near breakeven, execution efficiency has become the primary lever lenders can control. Reducing dwell time, optimizing funding allocations, and minimizing manual friction across post closing and reconciliation workflows are now essential. OptiFunder helps lenders operate profitably in this environment by automating warehouse decisioning, increasing visibility into carry and costs, and enabling teams to act in real time, ensuring margins are protected even when market relief is incremental rather than transformative.

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