Large lenders’ expectations that underwriting standards will ease over the next three months coincide with overall lenders’ expected pullback in the demand for single-family purchase mortgages, according to results from Fannie Mae’s third-quarter Mortgage Lender Sentiment Survey. The share of lenders who expect purchase mortgage demand to go up over the next three months decreased significantly – between 26 to 33 percentage points depending on loan type – with the largest decline of 33 percentage points on GSE-eligible loans. Among those surveyed, larger lenders continue to be more likely than their smaller counterparts to say they expect to ease their credit standards during the next three months, in particular for non-GSE-eligible and government loans, perhaps indicating an effort to boost purchase mortgage activity before the year comes to a close.
Highlights from the survey include:
Compared to general consumers, senior mortgage executives continue to be more optimistic about the overall economy and more pessimistic about consumers’ ability to get a mortgage today.
Consumer demand reported for single-family purchase mortgages over the prior three months remain little changed from Q2 to Q3 2014.
Most lenders reported no major changes in their credit standards for the prior three months and expected no major changes for the next three months. However, larger lenders continue to be more likely than smaller lenders to say their credit standards eased over the prior three months and that they expect standards to ease during the next three months, in particular for non-GSE eligible and government loans.
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