Survey: Fewer Mortgage Lenders Think Credit Box Is Too Tight

Posted by Patrick Barnard on December 05, 2016 No Comments
Categories : Residential Mortgage

About half of mortgage professionals said mortgage credit continues to be too tight and that it is hurting homeownership opportunities for U.S. home buyers, according to a survey conducted by Genworth Mortgage Insurance during the Mortgage Bankers Association’s Annual Convention & Expo recently held in Boston.

Although that seems high, it’s down considerably from 2014, when 61% of mortgage professionals polled said credit was too tight.

Of the 226 executives surveyed on-site, 50% said they believe that overly tight underwriting standards are keeping too many potential buyers on the sidelines, especially first-time home buyers, who are having a hard time meeting down-payment requirements.

Compounding the problem is the fact that inventory of single-family homes is very low right now, which, in turn, is boosting up home prices.

Forty-five percent of respondents said increased compliance burdens were the biggest threat to the housing industry over the next 12 months.

An additional 32% cited borrower access to credit as the biggest threat, while 20% believe the biggest threat is the current rising rate environment. Only about 3% cited lack of progress on government-sponsored enterprise reform as the most severe industry threat.

“This year’s survey data is consistent with the industry’s emphasis on improving credit access for more home-ready home buyers,” said Rohit Gupta, president and CEO of Genworth Mortgage Insurance, in a statement. “While there is certainly more to be done on this front, we are pleased by the gradual progress we have seen over the past two years.”

About 12% of respondents said they feel that tighter underwriting restrictions are still needed. About 38% said they believe the current standards are appropriate; that’s an increase of 24 percentage points compared with the 2014 survey.

Officials at Genworth think the increase in the number of executives who believe the current standards are appropriate reflects a higher comfort level with today’s credit environment.

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