Senior mortgage executives expect demand for purchase-money mortgages to diminish over the next three months, with government programs taking the biggest hit.
Demand for purchase financing on loans eligible for acquisition by the government-sponsored enterprises over the past three months was up at
75 percent of lenders.
That compares to a decline at 5 percent of GSE lenders. The difference — the net-up demand — was 70 percent, the same as was reported for three months previous.
Fannie Mae reported those findings in its third-quarter 2016 Mortgage Lender Sentiment Survey. There were 219 senior executives from 200 lenders that completed the survey in August.
But the outlook for the next three months diminished, with the net-up
demand tumbling to 22 percent from 60 percent.
On loans that aren’t eligible for GSE purchase, the net-up demand for the past three months rose to 51 percent from 43 percent in the first quarter.
Still, as was the case on GSE-eligible loans,
net-up demand declined for the three-month outlook — to 19 percent in the current report from 43 percent.
The survey indicated that demand for government mortgages over the past three months weakened, with the net-up demand ratio slipping to 52 percent from 57 percent.
Even worse was the three-month outlook for government loans, with the net-up demand plunging to 15 percent from 58 percent.
Expectations for lower demand on purchase-money mortgages is in line with seasonal factors; in its Housing Forecast: August 2016, Fannie has purchase financing volume sinking from $294 billion in the third quarter to $249 billion in the final-three months of this year and $181 billion in the first-three months of next year.
On refinances over the past three months, net-up demand jumped to nearly two-thirds from less than a third on GSE loans, while non-GSE net-up demand soared to 47 percent from 13 percent, and government net-up demand
leapt to 48 percent from 17 percent.
Over the next three months, the net-up demand for GSE refinances inched up to 6 percent from 5 percent.
But more executives expect a decline in demand on non-GSE and government refinances than expect an increase, with the net-down demand rising to 3 percent from 1 percent on non-GSE programs
and increasing to 4 percent from 3 percent on government mortgages.
Moving on to credit standards, while 15 percent of executives have seen GSE credit standards ease over the past three months, just 3 percent have seen them tighten — putting the net ease at 12 percent. Three months earlier, the net-ease was 9 percent.
Executives are a little less optimistic about the next three months, with the net-ease share on GSE standards inching up to 5 percent
from 4 percent in the second quarter.
On non-GSE loans, the net ease grew to 6 percent from 4 percent three months previous.
The net share who see easing ahead rose to 4 percent from 0 percent.
At 8 percent, the net-ease share on government loans was slightly higher than 6 percent in the prior survey. But the outlook for the next three months pulled the net-ease share down to 1 percent from 2 percent.
