PennyMac Financial at Barclays conference: tech gains offset rate pressure

On Tuesday, 15th September 2026, PennyMac Financial Services (PFSI) utilized the Barclays 24th Annual Global Financial Services Conference to share insights on its business amidst rising mortgage rates and technological advancements. Chief Executive Officer David Spector indicated that near-term originations would likely decelerate, while servicing, recapture, and cost-cutting measures would bolster the long-term outlook.

The stock, now trading near its 52-week low of $68.94 and down 47% year-to-date, remains affected by the unfavourable environment, but the company is perceived as undervalued according to InvestingPro data, placing it among stocks on the Most Undervalued list.

Despite the short-term challenges, data from InvestingPro suggests that PennyMac is undervalued at the present moment, positioning it among stocks highlighted in the Most Undervalued list. The message conveyed during the conference, however, was mixed yet constructive: mortgage rates have risen by approximately 50 basis points since the beginning of the quarter, adversely impacting production across all channels, whereas investments in technology are significantly reducing operating costs and enhancing efficiency.

Management affirmed that the company is on track for a mid-teens operating return on equity by the end of 2027, although the current quarter is projected to reach post-pandemic trough levels. Elevated mortgage rates are curbing production in consumer direct, broker direct, and correspondent channels. Technology is contributing to cost reductions swiftly, with processing costs down by about 50% on a marginal loan basis and loan officer efficiency increasing by roughly 20%.

Servicing continues to be a significant strength, generating around $530 million in quarterly fees on a $700 billion portfolio with an exceptionally low delinquency rate. Recapture rates are at record levels for management, reaching around 30% in conventional loans and exceeding 50% in government loans. PennyMac is aiming for a mid-teens operating ROE by the end of 2027, backed by lower costs, improved automation, and a more efficient capital structure.