Senior mortgage executives expect that demand for purchase financing will keep rising. While a few noted a recent easing of credit standards, even fewer expect this to continue.
On purchase financing loans eligible for purchase by the government-sponsored enterprises, 75 percent
of executives reported stronger demand compared to three months earlier.
At the same time, just
5 percent of senior mortgage lending executives indicated that purchase-money demand has fallen — leaving the share that was net up at 70 percent.
Those are just some of the details discussed in the second-quarter 2016 Mortgage Lender Sentiment Survey from Fannie Mae.
The survey was conducted in May and reflects
the opinions of 191 senior executives — such as chief executive officers and chief financial officers — randomly selected from Fannie’s list of approved lenders. The surveyed group worked at 169 lenders.
The net-up share on GSE-eligible mortgages soared from just 20 percent in the first-quarter survey.
Over the next three months, the net-up share of those who see demand rising for Fannie Mae and Freddie Mac purchase financing was 60 percent, not quite as strong as 68 percent in the previous report.
On non-GSE eligible mortgages, the second-quarter net-up share for those who experienced higher demand was just 43 percent, though that was a much bigger proportion than 18 percent the previous quarter.
But, as was the case with GSE loans, the net-up share for the next three months on non-GSE eligible loans fell — to 43 percent from 52 percent in the first quarter.
Fannie reported that the net-up share who experienced rising demand for government purchase-money mortgages leapt to 57 percent in the latest report from only 6 percent.
There was little change in expected government demand, with the net-up share creeping up to 58 percent from 55 percent.
On GSE-eligible refinances, the net-up share swung from a
negative 13 percent in the first quarter to a positive 30 percent in the second quarter — coinciding with an unexpected drop in interest rates.
But the net share of executives who expect increased GSE refinance demand over the next three months has plunged from 39 percent to just 5 percent in the most-recent survey.
Non-GSE eligible refinance demand increased, with the net-up share swinging from a negative 9 percent to a positive 13 percent in the second-quarter survey.
Executives who see non-GSE refinance demand rising swung to a net-down of 1 percent from a net-up of 24 percent in the first quarter.
On government refinance demand over the past three months, the net-up share swung from a negative 21 percent to a positive 17 percent.
But the net share who see demand for government refinances gaining steam over the next three months swung from a positive 29 percent to a negative 3 percent.
The report indicated that while 12 percent of executives reported an easing of credit standards on GSE-eligible loans, 3 percent said they had tightened. The put the net-ease ratio at 9 percent, slightly better than 8 percent three months earlier.
The net share who expect GSE standards to ease over the next three months, though, thinned to 4 percent from 6 percent.
Non-GSE eligible credit standards eased at a net of 4 percent of the respondents, off from the 6 percent net-ease share as of three months prior.
What’s worse, the net share who expect further easing on non-GSE programs dropped from 6 percent to zero.
On government mortgages during the past three months, the net-ease share swung to a positive 6 percent from a negative 1 percent.
There was hardly any change, however, in the share who expect easing on government credit standards over the next three months, with the net share slipping to 2 percent from 3 percent.
