What STRATMOR’s Garth Graham revealed at the 2026 Optimal Blue Summit
Mortgage profitability is back, at least on paper. After multiple difficult years, more independent mortgage banks are reporting positive margins again. But as STRATMOR Group senior partner Garth Graham made clear during his session at the 2026 Optimal Blue Summit, much of what the industry believes about profitability is either incomplete, outdated, or misleading.
The risk is not that lenders are unprofitable. The risk is believing the wrong reasons why.
Drawing from STRATMOR data and live insights shared at Summit, here are four of the most persistent profitability myths, along with what lenders should take away instead.
Myth 1: “We’re profitable again because we cut costs”
The reality is more fragile than that.
According to STRATMOR’s analysis, the industry’s return to profitability has not been driven primarily by structural cost reduction. Average cost per loan remains elevated and largely unchanged from post-refinance contraction levels. What has changed is revenue.
As Graham explained at Summit, lenders are making money largely because average loan balances have increased. That growth lifted per-loan revenue enough to offset persistently high expenses. In short, profitability improved not because operations became leaner, but because loan sizes grew.
That distinction matters. If margins depend on loan amounts continuing to rise, profitability becomes vulnerable the moment purchase prices flatten or decline. With early signs of price pressure appearing in several markets, that risk is no longer theoretical.
The takeaway: Profitability driven by larger loan balances is not the same as profitability built on durable operational efficiency.
Myth 2: “Refinance and purchase follow the same playbook”
They do not, and STRATMOR’s data makes that clear.
Refinance volume has been volatile for more than a decade, swinging up or down by at least 20 percent in most years. Purchase volume, by contrast, has remained relatively stable, even through major rate cycles and economic shifts.
Yet many lenders still design staffing models, workflows, and technology strategies as if refinance and purchase demand behave the same way.
They do not.
Graham highlighted that roughly two-thirds of refinance transactions now flow through consumer-direct call-center models, while more than 80 percent of purchase loans remain locally sourced. The industry has optimized refinancing for speed and efficiency, but it has not scaled the purchase experience in the same way.
That matters because refinance efficiency has masked deeper structural issues. Call centers work well for low-anxiety, repeat borrowers. Purchase borrowers face emotional, high-stakes decisions and expect a different level of guidance and engagement.
The takeaway: Treating refinance and purchase as operational equals leads to misaligned investments and missed opportunity.
Myth 3: “Technology spend is a profitability problem”
Technology is often an easy target, but STRATMOR’s benchmarking tells a different story.
Production technology represents a relatively small portion of total cost per loan, especially compared with sales and fulfillment expenses. And while banks spend more on technology than their independent mortgage bank counterparts, much of that spend goes toward people managing systems rather than the systems themselves.
More telling is how lenders feel about the technology they already use. STRATMOR’s lender surveys consistently show middling satisfaction and low loyalty scores across much of the mortgage tech stack. Tools are deployed, but not fully adopted. Features exist, but workflows remain manual – a pattern Optimal Blue addresses through purpose-built automation and integrated pricing, hedging, and execution workflows. Without that cohesion, integration gaps force borrowers and employees to repeat steps and re-enter information.
As Graham noted, the issue is not the tools themselves. The issue is that lenders are still using them in the same ways they always have.
The takeaway: Technology only improves profitability when it changes behavior, not when it simply increases spend.
Myth 4: “Efficiency alone will fix retention”
Efficiency matters, but it does not create loyalty.
One of the most sobering data points Graham shared at the 2026 Optimal Blue Summit had to do with customer retention. Only about one in five borrowers return to their prior lender. That is not primarily a pricing failure. It is an experience failure.
STRATMOR’s secret shopping work reveals consistent friction points:
Borrowers are asked the same questions multiple times
Conversations end with “apply online,” even after speaking with a loan officer
Context is lost during handoffs between systems and teams
Most importantly, lenders often fail to ask the one question technology cannot answer: why the borrower is there in the first place.
Why are they moving? Why now? What is driving urgency or anxiety?
Borrowers do not remember rate sheets. They remember whether they felt advised or processed. No amount of automation can replace that human connection.
The takeaway: Retention improves when technology supports human advice rather than replacing it.
The Bigger Lesson: Profitability Is Not a Spreadsheet Outcome
Garth Graham opened his Summit session with an unexpected story about railroad gauges that trace back to ancient Rome. His point was not historical trivia. It was a warning.
Mortgage banking, like railroads, still runs on inherited tools, assumptions, and behaviors. Some continue to work. Many do not. The longer lenders rely on “the way it has always been done,” the harder it becomes to compete with those willing to rethink the borrower experience from the ground up.
Profitability may be back. Sustainable profitability, however, will belong to lenders who challenge these myths and redesign their models around how borrowers actually behave, decide, and remember – and who choose technology partners like Optimal Blue that are built to support that redesign across every stage of the loan life cycle.
Commentary included in this piece shall not be construed as, nor is Optimal Blue providing, any legal, trading, hedging, or financial advice.
