Amid declining loan demand and intensified lender competition, mortgage lender sentiment fell to an all-time-low, according to Fannie Mae’s Q4 2018 Mortgage Lender Sentiment Survey.

Mortgage lenders reported a net negative profit margin outlook for the ninth consecutive quarter, falling across all loan types, including GSE-eligible, non-GSE-eligible and government, according to the report.

Fannie Mae Senior Vice President and Chief Economist Doug Duncan said stressful conditions continue to hang over the mortgage industry.

“Lenders are reporting the lowest purchase mortgage demand expectations across all loans types and the worst refinance demand expectations for GSE-eligible loans in the survey’s five-year history," he said.

For the eighth consecutive quarter, Fannie’s survey indicates that stiff competition among lenders was the primary reason for lower purchase mortgage demand. In Q4, demand came in at the lowest reading for any fourth quarter in the survey’s history.

Notably, consumer demand was named the second most important factor in the decrease, marking another survey high.

When it came to refinance mortgages, the survey revealed that lenders reported demand growth declined during the previous three months, falling to the second lowest reading in survey history for GSE-eligible loans. Furthermore, demand growth for non-GSE-eligible loans also fell to the lowest level in survey history.

Optimism for the next three months didn’t fare well either, as Fannie Mae reports growth expectations for the net share of GSE-eligible loans reached a new survey low.

“Rising mortgage rates and lean inventory amid solid home price appreciation have discouraged both first-time and trade-up homebuyers,” Duncan continued. “However, mortgage rates have shown signs of stabilization, and annual home price gains have slowed from the red-hot pace seen earlier this year.”

Fannie Mae indicates that throughout 2018, lenders continued to ease lending standards at a modest pace, but it has been significantly lower than the pace seen a year ago at this time. Nevertheless, lenders report the net easing expectations over the next three months for all three loan types remained relatively stable from the previous quarter and last year.

“While 2018 is likely to end up a disappointing year for the housing and mortgage industries, continued strength in demographics and the labor market offers hope that conditions should stabilize and may even improve next year,” Duncan said.