Mortgage lenders reported a negative profit outlook going into the new year, due mainly to lenders citing an increase in competition.

The share of lenders who said competition from other lenders was the top driver behind their negative outlook increased once again to another new survey high for the fourth consecutive quarter, continuing a trend that started this time last year, according to Fannie Mae’s Q4 2017 Mortgage Lender Sentiment Survey.

“Key trends have persisted throughout this year,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Lenders who see declining profits outweighed those noting improvements in the bottom line for the fifth consecutive quarter.”

“Three-fourths of those seeing deteriorating profits cite competition as the most important reason – a survey high – compared with only about one-third two years ago,” Duncan said. “This is not surprising given that refinance volume continues to shrink.”

Other factors lenders said was pulling down their profit outlook for the next three months includes consumer demand, staffing and market trend changes.

The net share of lenders who expect to see growth in the refinance market during the next three months decreased to the lowest level in a year across all loan types. In fact, more lenders reported a decline in mortgage refinance demand over the previous three months, marking the fourth consecutive quarterly drop.

“More lenders reported a pullback in refinance demand from the prior quarter than those who saw an increase, continuing the trend that started at the beginning of the year,” Duncan said. “This finding is consistent with our forecast for a steady drop in refinance originations this year.”

“With the outlook calling for rising interest rates and continued tight housing inventory constraining home sales, increased competition will likely continue to drive lenders’ mortgage business strategies,” he said.

Among these business strategies could be more loosening of the credit box. The net share of mortgage lenders reporting easing of credit standards over the past three months increased once again, reaching a new survey high for the second consecutive month.