Mortgage Lender Sentiment Survey

Lenders Still Bearish as Reported Mortgage Demand Erodes Further

September 11, 2018

Mortgage lenders reported a net negative profit margin outlook for the eighth consecutive quarter amid the further erosion of purchase mortgage demand, according to Fannie Mae's Q3 2018 Mortgage Lender Sentiment Survey®. On net, lenders’ profit outlook this quarter was worse than the outlooks reported last quarter and one year ago, with "competition from other lenders" once again cited by survey participants as the top reason for continued margin compression. For purchase mortgage demand, across all loan types – GSE-eligible, non-GSE eligible, and government – the net shares of lenders reporting growth for the previous three months and expectations of growth for the next three months reached the lowest readings for any third quarter in the survey's five-year history. Reported demand for refinance mortgages remained negative but stable amid the higher interest rate environment. Finally, in general, fewer lenders reported easing credit standards in the third quarter despite the decreased mortgage demand and increased competition.

"Lenders continued their bearish trend this quarter, as they note ongoing anemic refinance activity and the worst purchase mortgage demand for a third quarter in the survey's history," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The profit outlook remains negative, with those lenders expecting decreased profit margins outweighing those anticipating increases for the eighth consecutive quarter. For the first time this year, consumer demand was one of the top two reasons for the downbeat profit outlook, cited by more than one-third of lenders—a record high. Meanwhile, the pace at which lenders are easing credit standards has slowed. The net shares of lenders reporting easing credit standards for GSE-eligible and government loans are less than half the peak shares reached at the end of last year. This may suggest the realization among lenders that combatting declining affordability by making it easier to obtain mortgages might not be the answer – or simply that there is little room for additional easing going forward."

Lenders' profit margin pessimism continues for 8th consecutive quarter

On this webpage you will find a news release with highlights from the survey results, the Q3 2018 data summary highlighting key attitudinal indicators, a detailed research report, the questionnaire used for the Q3 2018 survey, and FAQs providing additional information about the survey.

Downloads and Related Links

Q3 2018 News Release
Q3 2018 Detailed Research Report  

Mortgage Lender Sentiment Survey Archive
Click here for an archived list of Fannie Mae's Mortgage Lender Sentiment Survey results.