Lenders Say Mortgage Credit Standards Are Easing

Posted by Patrick Barnard on September 17, 2015 No Comments
Categories : Residential Mortgage

More lenders are reporting the easing of mortgage lending standards across all loan types, according to Fannie Mae's third-quarter Mortgage Lender Sentiment Survey.

The survey, conducted in August, asked senior mortgage executives if their lending organization's credit standards have eased, tightened or remained the same for government-sponsored enterprise (GSE) eligible, non-GSE eligible, and government loans over the past three months.

Of note, the gap between lenders reporting easing rather than tightening jumped to 20 percentage points and 18 percentage points for GSE eligible and non-GSE eligible loans, respectively – marking new highs of ‘net easing.’

Further, the study found that more lenders in this quarter expect their organizations to ease credit standards over the next three months for both GSE eligible and non-GSE eligible loans.

‘For the first time in seven quarters, we see a pronounced increase in the share of lenders, particularly medium- and larger-sized lenders, reporting on net an easing of credit standards in both the GSE eligible and non-GSE eligible loan categories. This is a significant result in light of public discourse on credit availability and standards,’ says Doug Duncan, senior vice president and chief economist at Fannie Mae.

‘Our survey responses appear to reflect multiple factors at play. Lenders may be becoming more comfortable with the GSEs' updated guidelines intended to provide them greater certainty regarding representations and warranties. Lenders also may be getting more familiar with the regulatory and compliance environment. Finally, lenders may be removing credit overlays. Overall, we expect that lenders' tendency toward easing credit standards, together with relatively low mortgage rates and a strengthening labor market, will continue to support the housing market expansion,’ says Duncan.

For the full report, click here.

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