A Fannie Mae Mortgage Lender Sentiment Survey has mortgage lenders feeling very optimistic on purchase demand as well as profit margins and credit standards. The survey, conducted in May, reveals that lenders’ near-term outlook for purchase demand and profit margin remains at high levels, and beyond the 2014 results. This has resulted in lenders reporting more credit loosening than credit tightening.
“This quarter’s results showed that the growing optimism of lenders has been rewarded,” Fannie Mae Chief Economist Doug Duncan said in a release announcing the survey. “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.
“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,” he continued. “The recently released National Housing Survey reinforces an increasingly optimistic for housing in 2015, consistent with our forecast. We expect a continued housing expansion in 2015 after an uneven and disappointing 2014.”
- Highlights of the survey includeSenior mortgage executives’ optimism is on the rise, and significantly more so than the general consumer regarding future home prices. This quarter, the share of lenders expecting home prices to rise over the course of one year reached a survey high of 70 percent.
- Lenders reporting increased mortgage purchase demand over the prior three months climbed again this quarter, reaching a survey high for GSE-eligible and government loans (77 percent and 65 percent, respectively).
- Many of the institutions expect their current mortgage servicing rights (MSR) execution strategies to remain at the same level over the next 12 months.
- Although lenders’ profit-margin outlook across institution sizes fell slightly from last quarter, with additional lenders reporting decreased profit margin expectations over the next three months, it remains similar to 2014.
The Mortgage Lender Sentiment Survey is conducted by Fannie Mae polls senior executives of its lending institution customers on a quarterly basis so as to access views and outlooks across various dimensions of the mortgage market.