A survey of the country’s community banks found that the No. 1 barrier to making more residential loans is regulation.
Of all the banks surveyed, 73 percent indicated that the regulatory burdens of new rules and requirements are preventing them from making more residential loans.
The examination environment is also causing community bankers to restrain home lending, with 28 percent citing this as a factor.
In all, 519 financial institutions participated in the ICBA Community Bank Lending Survey, which was conducted by the Independent Community Bankers Association during the fall. The survey is most representative of banks with assets of between $50 million and $500 million.
Chief executive officers or presidents completed the surveys on behalf of 59 percent of the responding banks, and 20 percent were completed by the chief lending officer
Regulation isn’t the only thing holding back home lending.
Nearly half of the bankers indicated there was a lack of borrower demand for mortgages.
Another 41 percent noted a lack of qualified borrowers.
In addition, almost a third of the community bankers cited competition from bank lenders as an obstacle, while more than a fifth said non-bank competition is eating into their business.
