September 17, 2014Mortgage Lender Sentiment Survey Results Show Large Lenders Expect Credit Standards to Ease During Next Three Months
WASHINGTON, DC – Large lenders’ expectations that underwriting standards will ease over the next three months coincide with overall lenders’ expected pullback in the demand for single-family purchase mortgages, according to results from Fannie Mae’s third-quarter Mortgage Lender Sentiment Survey. The share of lenders who expect purchase mortgage demand to go up over the next three months decreased significantly – between 26 to 33 percentage points depending on loan type – with the largest decline of 33 percentage points on GSE-eligible loans. Among those surveyed, larger lenders continue to be more likely than their smaller counterparts to say they expect to ease their credit standards during the next three months, in particular for non-GSE-eligible and government loans, perhaps indicating an effort to boost purchase mortgage activity before the year comes to a close.
"Lenders’ diminished purchase mortgage demand outlook is broadly in line with the softened consumer housing sentiment seen in the August National Housing Survey results released last week," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Historically, as lenders face a more competitive market for loan volume, it’s not uncommon to see some loosening in the lending standards; however, this time, the easing will likely be around the edges." These latest third quarter results are largely consistent with Fannie Mae’s study released last month, titled "Impact of QM," that shows larger lenders are more likely than smaller lenders to pursue non-QM loans. "Larger lenders are expecting to tap into the non-GSE-eligible and government loan market to maintain or grow their market share and offset their anticipated slowing mortgage demand as the peak spring/summer selling seasons are coming to an end," said Duncan.
MORTGAGE LENDER SENTIMENT SURVEY HIGHLIGHTS
Differences in Economic and Housing Sentiment Between Senior Executives and General Consumers
Steady Consumer Purchase Mortgage Demand Over the Prior Three Months
Negative Consumer Purchase Mortgage Demand Outlook for the Next Three Months
Expectations of Easing Credit Standards Among Larger Lenders for Non-GSE Eligible and Government Loans
Stable Mortgage Execution Outlook
Stable Mortgage Servicing Rights (MSR) Execution Outlook
Slightly Negative Profit Margin Expectations for the Next Three Months
This first-of-its-kind Mortgage Lender Sentiment Survey conducted by Fannie Mae polls senior executives of its lending institution customers on a quarterly basis to assess their views and outlook across varied dimensions of the mortgage market. The third quarter 2014 Fannie Mae Mortgage Lender Sentiment Survey was conducted between August 6, 2014 and August 22, 2014. Interviews were conducted by Penn Schoen Berland in coordination with Fannie Mae. For detailed findings from the 2014 third quarter survey, as well as survey questionnaires and other supporting documents, please visit the Fannie Mae Mortgage Lender Sentiment Survey page on fanniemae.com. Also available on the site are special topic analyses, which focus on findings and analyses of important industry topics.