The American Bankers Association’s (ABA’s) 22nd Annual Real Estate Lending Survey determined that 90 percent of the typical bank’s mortgage loans made last year were qualified mortgages (QMs). The survey also found that 78 percent of respondents expect the Consumer Financial Protection Bureau’s (CFPB’s) Dodd-Frank mortgage lending rules will continue to limit credit availability, while 19 percent labeled the impact as severe.
“As expected, the ability-to-repay and QM rules have dampened the housing market recovery,” said Robert Davis, EVP at the American Bankers Association. “Combine that with new mortgage disclosures, which are just around the corner, and we’ll continue to see a slow down in what should be the ideal time to buy a home.”
The survey found that high debt-to-income levels is the most likely reason for a mortgage loan not meeting QM standards followed by lack of required documentation. Of the 182 respondents, 77 percent with assets less than $1 billion, reported the highest percentage of loans to first-time homebuyers in the survey’s 22 year history.
Surveyed banks’ foreclosure rates declined from 0.78 percent in 2013 to 0.57 percent in 2014, while the average delinquency rate for single family homes decreased from 2.16 percent to 1.76 percent, the ABA reported. The 30-year fixed-rate increased slightly at 50.5 percent of all loans in 2014 compared to 50.3 percent in 2013.
According to the survey, bankers are most concerned about compliance and increasing regulatory burden followed by economic uncertainty, the interest rate environment, and community bank challenges. Of the total respondents, 87 percent said regulation is having a moderate to extreme negative impact on the bank’s business.
“June is American Housing Month and primetime for homebuyers. If you’re thinking about buying a home, my advice is to start by talking to your banker,” Davis said. “Your local banker knows the housing market in your community and can discuss your long-term financial goals to help you achieve the American dream of homeownership.”
Click here to view 22nd Annual Real Estate Lending Survey.