David Spector : Look, as rates decline, we do see more customer lean in on closed-in seconds, primarily on the servicing that we added in 2023. And that’s — excuse me, pre 2023 for closed-end seconds. On cash outs, I think, look, I think that as rates decline, you’ll see more borrowers lead in to cash outs versus close in seconds. And as rates stay higher, they’re going to be we needed to closed-end seconds. It’s for us, it’s the appropriate product mix that we have as it gives borrowers the opportunity to take cash out of their property typically to pay down lower cost debt. But we’re in a position right now where the rallies in the marketplace still have not as meaningful effect as the majority of the mortgage market is, as you know, in kind of 3% and 4% mortgages.
So I think that you will see an increased amount of rates. You’ll see an increased amount of refi as rates do decline. But look, the closed end second product for us has been great for consumer direct in terms of maintaining capacity in place. We’ve launched it to our nonport customers, which allows us to do profitable growth in seconds and maintain capacity in place for when we do see a significant decline in rates in consumer direct. We’ve also introduced it in broker direct. And I think that that’s something that I’m encouraged. And look, the brokers have the need to maintain capacity just like we do in consumer direct, and it’s a product that best serves their customers. It also adds to the broker direct value proposition that we have. And I’d be remiss if I did bring up that look, we’re continuing to gain share broker direct.
And I think we’re starting to see more and more brokers seeing PennyMac as a strong alternative to the top two participants. And in addition, we’ve invested a lot in technology to support the brokers. And so I think that we like what we’re seeing in broker direct and margins are maintaining their levels. And so as closed end second versus cash out refi versus rate in term refi we’ve got to cover it in our production divisions, and we’re going to participate no matter what the rate environment is.
Dan Perotti: And just to add on to what David said and to address one part of your question. So the refinances that we’re seeing in that shift that I had talked about is really shifting our resources to addressing rate and term refinances primarily at the end of Q4 and Q1 as opposed to the second lien because that is really a more profitable product for us and also something that isn’t necessarily persistent depending on what happens to interest rates. And so to David’s point, to the extent interest rates go up, we have the second lien product and expanding breadth of that to be able to move into to the extent interest rates decline, we have the ability more loans will be refinanceable. It wasn’t a shift. I want to make sure that I didn’t get the impression that we were shifting from second lien to doing cash out refis. We didn’t kind of cross over that threshold. It’s really rate and term refinance over we saw uptick in Q4 and now in Q1.
Operator: We have no further questions at this time. I’ll now turn it back over to Mr. Spector for closing remarks.
David Spector: Thank you. I want to thank everyone for joining us this afternoon. We went over a lot of good information, and we had what I thought was a really outstanding quarter. I want to thank everyone for the thoughtful questions. If anyone has any additional questions, feel free to reach out to our Investor Relations team by e-mail or phone. And again, thank you all for joining the call.
