Mortgage lenders are feeling more positive on purchase mortgage demand, profit margin, and credit standards over the next three months, according to a recent Fannie Mae’s second quarter 2015 Mortgage Lender Sentiment Survey. The survey shows that lenders’ near-term outlook for purchase demand and profit margin are reaching higher levels than 2014’s survey results. Lenders are also reporting looser credit standards versus tighter credit standards.
“This quarter’s results showed that the growing optimism of lenders has been rewarded,” said Doug Duncan, SVP and chief economist at Fannie Mae. “The share of lenders reporting increased purchase mortgage demand over the prior three months reached a survey high for both GSE-eligible and government loans. At the same time, the positive gap grows between lenders reporting loosening or maintaining existing credit standards, relative to those reporting tightening.”
Fannie Mae’s Mortgage Lender Sentiment Survey was conducted between May 7, 2015 and May 17, 2015 by Penn Schoen Berland in coordination with Fannie Mae, according the GSE. The survey polls senior executives of its lending institution customers every quarter to review their opinions and outlooks across the mortgage market.
The survey found that senior mortgage executives are not only optimistic, but are significantly more optimistic than general consumers about future home prices. This quarter, 70 percent of lenders expect home prices to go up over the next 12 months, a new survey high.
The share of lenders reporting increased mortgage purchase demand climbed again this quarter, reaching a survey high for GSE-eligible loans at 77 percent and government loans at 65 percent, according to the survey.
Meanwhile, credit tightening has continued to fall since last year, Fannie Mae reported. Lenders are reporting loosening or maintaining existing credit standards, in contrast to those reporting credit tightening.
Most institutions reported to Fannie Mae that they expect to maintain their strategy in relation to secondary market outlets over the next year. Many lenders also expect to increase the shares of loans originated and then sold to GSEs. The majority of institutions expect their current mortgage servicing rights (MSR) execution strategies remain constant over the next year.
“While not matching first quarter 2015 levels, the profit margin and purchase mortgage demand expectations over the next three months remain above the 2014 readings,” Duncan said. “The results, when taken together with the continued positive trend in consumer attitudes shown in the recently released National Housing Survey, reinforce an increasingly optimistic outlook for housing in 2015, consistent with our forecast. We expect a continued housing expansion in 2015 after an uneven and disappointing 2014.”
Click here to view Fannie Mae's Second Quarter 2015 Mortgage Lender Sentiment Survey.