Mortgage Standards Sustained at Banks

Mortgage News

Mortgage Daily Staff

                                                 February 7, 2017

For most depository institutions, credit standards for a range of residential lending programs haven’t changed much over the past three months. Demand was mixed.

Credit standards for home-purchase loans that are eligible for government-sponsored enterprise approval were mostly unchanged from three months earlier at banks.

That is according to the The January 2017 Senior Loan Officer Opinion Survey on Bank Lending Practices that was published by the Federal Reserve Board.

Participating in the survey were 70 domestic banks and 23 U.S. branches and agencies of foreign banks.

But demand for GSE-eligible mortgages was weaker at 29 percent of large banks, those with at least $50 million in annual sales, though stronger at a quarter of smaller banks.

There were also few bankers who noted a change in credit standards for government mortgages; QM non-jumbo, non-GSE eligible loans; non-QM jumbo; and non-QM non jumbo mortgages.

While nearly a fifth of all banks noted weaker demand for government mortgages, 15 percent of smaller banks reported heightened demand. It was a similar dynamic for QM non-jumbo, non-GSE-eligible loans; non-QM non-jumbo loans; and QM jumbo mortgages.

On non-QM jumbo loans, 27 percent of larger banks reported weaker demand, while another 18 percent of large banks reported stronger demand.

Eleven percent of smaller banks, those with less than $50 million in annual sales,
said standards on QM jumbo loans had tightened.

Credit standards for subprime mortgages weren’t changed at any of the six institutions that make such loans. Subprime demand was up at one of the two large banks that provide subprime financing.

On home-equity lines of credit, there was little change from three months prior for credit standards.
HELOC demand was stronger at 14 percent of all banks and weaker at more than a fifth of large banks.

In the commercial real estate sector, for just nonfarm, nonresidential properties,
16 percent of all banks indicated tighter standards.

Forty-three percent of smaller banks experienced more restrictive standards on multifamily loans. The share was lower for large banks at 27 percent. Demand in this category was stronger at 21 percent of small banks and weaker at 22 percent of big banks.

Standards on construction-and-land-development loans were more restrictive at 30 percent of large banks, though just at 18 percent of smaller banks. At the same time, demand for C&D loans was weaker at 23 percent of large banks but stronger at 11 percent of smaller banks.

Mortgage Daily Staff

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