WASHINGTON, Dec. 17, 2014 /PRNewswire/ -- Fewer mortgage
lenders are reporting tighter credit while weak consumer demand is
increasingly cited as driving lenders' decreased profit margin
outlook, according to results from Fannie Mae's fourth quarter 2014
Mortgage Lender Sentiment Survey™. Conducted in November 2014, the survey shows that for
GSE-eligible loans, the share of lenders who say they have
tightened their credit standards during the prior three months has
gradually trended down this year, decreasing to 13 percent in the
fourth quarter compared to 28 percent in the first quarter. For
non-GSE-eligible loans, more lenders reported easing than
tightening of credit standards for the second consecutive quarter.
Despite this, consumer demand reported for single-family purchase
mortgages over the prior three months declined significantly from
Q3 to Q4, and the share of lenders expecting demand to go down
during the next three months has climbed, supporting expectations
that the housing market will continue to grind its way upward next
year.
"Overall, lenders' growing concerns with purchase mortgage
demand is broadly in line with major industry indicators and
supports our views of a modest housing expansion going into 2015,"
said Doug Duncan, senior vice
president and chief economist at Fannie Mae. "While government
regulatory compliance remains the top driver of declining profit
margin expectations across all lenders, more lenders, and in
particular larger lenders, are increasingly concerned with consumer
demand risk."
"The increased share of lenders who reported easing of credit
standards could be associated with Fannie Mae and Freddie Mac
releasing updated guidelines to their representation and warranty
frameworks, intended to provide lenders with greater certainty and
clarity around potential repurchase risk. These efforts indicate
industry endeavors to boost housing activities by making mortgages
available to more borrowers," said Duncan. "We believe that some
combination of easing of credit standards, relatively low mortgage
rates, and ongoing labor market improvements will help the housing
market to grow steadily, albeit modestly, in 2015."
MORTGAGE LENDER SENTIMENT SURVEY HIGHLIGHTS
Differences in Economic and Housing Sentiment Between Senior
Executives and General Consumers
- Compared to general consumers, senior mortgage executives, and
especially those at larger lenders, continue to be more optimistic
about the overall economy and more pessimistic about consumers'
ability to get a mortgage today.
Downward Consumer Purchase Mortgage Demand
Reported Over the Prior Three Months
- Consumer demand reported for single-family purchase mortgages
over the prior three months declined significantly from Q3 to Q4,
in particular among larger lenders.
Negative Consumer Purchase Mortgage Demand
Outlook for the Next Three Months
- Lenders' purchase mortgage demand outlook has gradually trended
down each quarter throughout the year, with fewer lenders each
quarter reporting increased mortgage demand expectations over the
next three months, although we recognize that there might be
seasonal influences.
Gradual Credit Standards Easing
- Credit tightening observed early this year has gradually
trended down each quarter throughout the year, with fewer lenders
each quarter reporting credit tightening over the prior three
months. Larger lenders are more likely to report credit easing than
tightening, across all loan types, throughout the year.
Stable Mortgage Execution Outlook
- Throughout the year, most lenders reported that they expect to
maintain their mortgage execution strategies for the next three
months.
Stable Mortgage Servicing Rights (MSR)
Execution Outlook
- Throughout the year, most lenders reported that they expect to
maintain their Mortgage Servicing Rights (MSR) execution strategies
over the next three months.
Stable Profit Margin Expectations for the
Next Three Months
- Lenders' profit margin outlook has remained relatively stable
after the first-quarter drop. Among larger lenders, the importance
of government regulatory compliance in driving their decreased
profit margin outlook has gradually declined and the importance of
consumer demand has gradually increased.
The 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 Fannie Mae fourth quarter
2014 Mortgage Lender Sentiment Survey was conducted between
November 5, 2014 and November 24, 2014 by Penn Schoen Berland in
coordination with Fannie Mae. For detailed findings from the 2014
fourth 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.
Opinions, analyses, estimates, forecasts, and other views of
Fannie Mae's Economic & Strategic Research (ESR) group or
survey respondents included in these materials should not be
construed as indicating Fannie Mae's business prospects or expected
results, are based on a number of assumptions, and are subject to
change without notice. How this information affects Fannie Mae will
depend on many factors. Although the ESR group bases its opinions,
analyses, estimates, forecasts, and other views on information it
considers reliable, it does not guarantee that the information
provided in these materials is accurate, current, or suitable for
any particular purpose. Changes in the assumptions or the
information underlying these views could produce materially
different results. The analyses, opinions, estimates, forecasts,
and other views published by the ESR group represent the views of
that group or survey respondents as of the date indicated and do
not necessarily represent the views of Fannie Mae or its
management.
Fannie Mae enables people to buy, refinance, or rent
homes.
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SOURCE Fannie Mae