Fannie Mae survey shows a weaker outlook for lenders
The profit margin outlook for mortgage lenders remains next negative for the eighth consecutive quarter in Q3 2018 according to Fannie Mae’s Mortgage Lender Sentiment Survey.
Competition from other lenders is still the main reason for the negative outlook as demand for purchase mortgages declines. The net share of lenders reporting increased demand across all loan types hit its lowest reading at any time in the index’s five-year history.
"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. "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.”
Lenders are easing lending standards at a slower pace with the net shares of lenders reporting easing credit standards for GSE-eligible and government loans 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," added Duncan.
