The outlook among senior lending executives for home values and mortgage demand has grown increasingly weaker over the course of this year.
Forty-seven percent of senior home lending executives expect home prices to increase over the next 12 months.
That was less than the 49 percent who expected appreciation three months prior and the third quarter in a row that the share diminished.
Fannie Mae discussed the findings from its Mortgage Lender Sentiment Survey for the fourth quarter. Senior executives such as chief executive officers and chief financial officers at Fannie’s lending institution partners were polled in November for the report.
Executives who see mortgages as difficult to obtain accounted for 86 percent of respondents. At the same time, just 13 percent said it was easy to get a loan. There hasn’t been much change in these categories throughout the year.
The report indicated that 42 percent of those surveyed indicated increased demand over the past three months for purchase financing on loans eligible for government-sponsored enterprise acquisition. The share has been down for two quarters in a row and has tumbled from 56 percent in the second quarter.
On non-GSE purchase financing, 43 percent cited increased demand, plunging from nearly two-thirds three months previous.
Demand for purchase financing on government mortgages was up for 29 percent of the survey participants, sinking from 43 percent in the prior three-month period.
A fifth of the executives said GSE-eligible purchase financing demand was lower, edging up from 17 percent in the last survey.
Similarly, 15 percent of executives pointed to weaker demand on non-GSE loans, jumping from the previous period’s 8 percent share.
Demand for government loans to finance home purchases was off at 30 percent of those surveyed, worse than 23 percent in the third quarter.
Demand for GSE-eligible purchase financing was projected to increase over the next three months by 17 percent of the executives. This group’s share was down for the third consecutive quarter and has plummeted from 59 percent in the first quarter of the year.
Non-GSE eligible demand is expected to rise by 20 percent
of those surveyed. The share was down two quarters in a row. In the second quarter, the share was more than half.
An increase in government purchase mortgage demand
was expected by 16 percent, down each quarter since the beginning of the year — when in excess of half of the executive were predicting an increase.
Twenty-two percent expect a decline in GSE-eligible purchase financing demand, deteriorating from just 4 percent in the second quarter.
Non-GSE eligible demand is projected to drop by nearly a fourth of executives, up for the last three quarters. This category accounted for only 4 percent in the first quarter.
The share who see a decline ahead in government demand has climbed from 7 percent in the second quarter to 27 percent in the fourth quarter.
GSE credit standards have eased over the past three
months according to 12 percent of executives. Eighteen percent indicated lighter credit standards on non-GSE loans, and 16 percent saw easing on government mortgages.
The share who noted tighter credit standards has fallen for the third consecutive quarter for all three types of loans. On GSE loans, the share was 13 percent, while it was 9 percent on non-GSE loans and 13 percent on government loans.
Most executives don’t see any changes ahead for credit standards on all three types of loans.
