As demand has diminished for refinanced single-family loans, credit standards on mortgages — especially government-sponsored enterprise loans — have loosened.
Compared to three months ago, half of senior mortgage executives have experienced increased demand for purchase financing that is eligible for purchase by Fannie Mae or Freddie Mac.
At the same time, 16 percent of executives indicated that demand for GSE programs used to finance a home purchase has diminished over the preceding three months.
That put the net-up share on purchase-money business at 34 percent.
Washington-based Fannie reported the findings in its third-quarter 2017 Mortgage Lender Sentiment Survey. The results reflects responses from 206 senior mortgage executives — including chief executive officers and chief financial officers — at 190 lending institutions.
The net-up share was 34 percent on non-GSE mortgages used to fund a home purchase and 26 percent for government loan programs.
Fannie
said the over the next three months, 34 percent of surveyed market participants expected further strengthened demand on GSE purchase financing, while 17 percent projected a drop — leaving a net-up rate of 17 percent. For non-GSE loans, the net-up rate was 16 percent, and the rate on government mortgages was 12 percent.
The outlook for refinance business, however, was starkly different — with 59 percent of those surveyed saying demand has fallen for GSE loans compared to three months earlier.
Given the 15 percent who saw growing refinance demand, the net-up share was a negative 44 percent. Non-GSE net-up refinance demand was a negative 42 percent, and it was a negative 49 percent for government lending.
Looking three months forward, the GSE net-up share on refinances was a negative 30 percent, while the share was
a negative 28 percent for non-GSE lending and negative 30 percent for government originations.
As mortgage demand has weakened, home lenders have become more flexible with loan approvals.
Over the past three months, 26 percent of GSE lenders have relaxed their credit standards. With only 1 percent tightening standards, the net-ease share was 25 percent. Non-GSE net-ease share was 19 percent, and the share was 12 percent on government programs.
Looking ahead three months, continued easing is expected, with a net-ease share of 16 percent on GSE loans. The projected net-ease share on non-GSE
loans was 10 percent, and it was 9 percent on government programs.
