A survey of banks found that demand for jumbo mortgages has recently retreated, while demand was up for credit lines secured by residential properties. By size, larger banks have seen a bigger drop in overall demand than their smaller counterparts.
On residential
loans that are eligible for purchase by Fannie Mae or Freddie Mac, credit standards eased compared to three months earlier at 18 percent of the 63 surveyed banks that originate such loans. The share jumped to a quarter at large banks.
Demand for government-sponsored enterprise loans was up at 11 percent of banks — with 19 percent of smaller banks indicating improvement. But demand weakened at nearly a quarter of banks — with more than a third of large banks noting weakening.
Those details and many more were discussed in the January 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board.
Responses from 73 domestic banks and 24 U.S. branches and agencies of foreign banks are reflected in the survey.
At just small to mid-sized banks, credit standards on government-backed home loans were tighter at 11 percent of banks and looser at another 11 percent.
Demand for government mortgages was down at 17 percent of banks. At just large banks, 29 percent reported weaker demand.
The Fed noted that there was hardly any change in underwriting guidelines on non-jumbo, non-GSE Qualified Mortgages.
Demand in this category was
lower at more than a fifth of banks and at a third of only large banks. But demand was slightly better at 10 percent of smaller banks.
On QM jumbo mortgages, however, standards eased somewhat at 10 percent of the 63 banks that indicated they make such loans.
The report indicated that demand for QM jumbo mortgages weakened at more than a fifth of all banks and 30 percent of large banks. But demand rose at 11 percent of all banks.
Hardly any change in credit standards on non-QM loans, jumbo or non-jumbo, has taken place at banks of all sizes.
Demand for non-QM jumbo mortgages was down at a quarter of all banks and nearly a third of large banks, while it was weaker on non-QM non-jumbo loans at a fifth of all banks and a quarter of large banks.
Of the four banks that make subprime mortgages, two indicated no change in credit requirements, one said standards had eased and the other said lending requirements were more difficult.
There was no change over the previous three months for subprime demand.
Most of the 70 banks that make home-equity lines of credit indicated that credit standards hadn’t changed from the Fed’s previous report.
What has changed on HELOCs, however, was demand — which was up at nearly a quarter of banks and lower at 11 percent of survey respondents.
Commercial Real Estate
Nearly a fifth of small to mid-sized banks that make non-farm, non-residential commercial mortgages said credit standards were tighter.
At the same time, demand for commercial mortgages was up at 18 percent of the banks.
More than a quarter of the 71 banks that make multifamily loans have made it harder to qualify over the past three months.
Multifamily demand strengthened at 23 percent of all banks and more than a third of small banks. It softened, however, at 14 percent of the respondents’ institutions.
On construction-and-land-development loans, around 17 percent of the 71
banks that make such loans noted a tightening of credit conditions.
Although a fifth of banks noted stronger demand for C&D loans, 11 percent indicated demand was weaker.
At smaller banks, 28 percent indicated that demand was stronger.
