According to new data from Fannie Mae, lenders are hesitating to ease credit standards for mortgages
The share of lenders who eased credit standards over the prior three months fell in February, according to new data from Fannie Mae – as did the number of lenders who expect to in the near future.
Lenders are also reporting a drop-off in demand for purchase mortgages, but expect an increase in demand for refinances, according to Fannie’s latest Mortgage Lender Sentiment Survey.
“This quarter’s Mortgage Lender Sentiment Survey results reflect recent market volatility. Lenders anticipate a pickup in refinance demand in light of the decline in interest rates this year, but report a slowdown in purchase demand perhaps because of a seasonal component,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The survey suggests a slower pace of easing, as the net share of lenders who reported that they have eased credit standards overall over the past three months remained positive but has declined since the third quarter of last year. Lender expectations for easing over the next three months have also moderated. Many lenders also indicate a likely increase in the sales of mortgage servicing rights, possibly to compensate for these countervailing pressures on profits and to take advantage of current favorable pricing in the market.”
This is the second straight quarter that the share of lenders who reported easing rather than tightening credit standards fell. And a majority of lenders reported tightening credit standards on government loans for the first time since 2014, according to the report. And while most lenders expect to ease credit than tighten it over the next three months, expectations for easing credit are lower than last quarter.
Lenders are also reporting a drop-off in demand for purchase mortgages, but expect an increase in demand for refinances, according to Fannie’s latest Mortgage Lender Sentiment Survey.
“This quarter’s Mortgage Lender Sentiment Survey results reflect recent market volatility. Lenders anticipate a pickup in refinance demand in light of the decline in interest rates this year, but report a slowdown in purchase demand perhaps because of a seasonal component,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “The survey suggests a slower pace of easing, as the net share of lenders who reported that they have eased credit standards overall over the past three months remained positive but has declined since the third quarter of last year. Lender expectations for easing over the next three months have also moderated. Many lenders also indicate a likely increase in the sales of mortgage servicing rights, possibly to compensate for these countervailing pressures on profits and to take advantage of current favorable pricing in the market.”
This is the second straight quarter that the share of lenders who reported easing rather than tightening credit standards fell. And a majority of lenders reported tightening credit standards on government loans for the first time since 2014, according to the report. And while most lenders expect to ease credit than tighten it over the next three months, expectations for easing credit are lower than last quarter.
