AgentIndustry News

Lenders report loosening mortgage credit standards

Fannie Mae survey says lending standards are easing across all loan types
  • For the first time in seven quarters, mortgage lenders are reporting an easing of lending standards across all loan types.
  • The gap between lenders reporting easing as opposed to tightening over the prior three months jumped to 20 percentage points and 18 percentage points for GSE-eligible and non-GSE-eligible loans, respectively -- reaching new survey highs of “net easing.”
  • Senior mortgage executives are in such a good place that they are more optimistic about the economy and future home prices than general consumers.

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For the first time in seven quarters, mortgage lenders are reporting an easing of lending standards across all loan types, according to Fannie Mae’s third-quarter 2015 Mortgage Lender Sentiment Survey.

According to the government-sponsored enterprise’s (GSE) August poll of senior mortgage executives, lenders are becoming more comfortable with the GSEs’ updated guidelines intended to provide them greater certainty regarding representations and warranties, as well as the heightened regulatory and compliance environment.

They may also be removing credit overlays, according to the survey.

fannie-mae-mortgage-sentiment

According to the survey, the gap between lenders reporting easing as opposed to tightening over the prior three months jumped to 20 percentage points and 18 percentage points for GSE-eligible and non-GSE-eligible loans, respectively — reaching new survey highs of “net easing.”

In addition, the share of lenders who expect their organizations to ease credit standards over the next three months ticked up this quarter for both GSE-eligible and non-GSE-eligible loans. This sentiment was especially prevalent among medium- and larger-sized lenders, Fannie Mae found.

“This is a significant result in light of public discourse on credit availability and standards,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Overall, we expect that lenders’ tendency toward easing credit standards, together with relatively low mortgage rates and a strengthening labor market, will continue to support the housing market expansion.”

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“Lenders’ tendency toward easing credit standards, together with relatively low mortgage rates and a strengthening labor market, will continue to support the housing market expansion.” – Doug Duncan, SVP and chief economist at Fannie Mae

Senior mortgage executives are in such a good place that they are more optimistic about the economy and future home prices than general consumers. However, they are less optimistic than consumers when it comes to the ease of getting a mortgage today, the survey concluded.

While most institutions reported that they expect to maintain their strategy with regard to secondary-market originations over the next 12 months, more institutions reported expectations to increase rather than to decrease the shares of loan originations sold to the GSEs and Ginnie Mae.

For purchase mortgage demand over the next three months, the share of lenders expecting demand to go up fell this quarter from the second quarter, likely reflecting seasonal influences, but remains higher than the same period last year, Fannie Mae said.

Email Amy Swinderman.