Banks reported an increase in demand for a number of home lending products over the past three months. At the same time, several financial institutions have relaxed standards.
On mortgages eligible for purchase by Fannie Mae or Freddie Mac, more than a quarter of large banks indicated that credit standards had eased.
Demand for government-sponsored enterprise loans was up at half of the respondents, with smaller banks experiencing a slightly larger bump.
The Federal Reserve Board reported the results from its April 2015 Senior Loan Officer Survey on Bank Lending Practices. Responses from a total of 76 domestic banks and 23 U.S. branches of foreign banks were collected for the report.
Still, guidelines issued by the GSEs in November 2014 on the definition of life-of-loan representation and warranty exclusions have apparently done little to improve liquidity. Twenty percent of small banks would be less likely to approve a borrower with a 620 FICO score and 20 percent down payment now than before the changes.
On government mortgages, 16 percent of the smaller banks
indicated an easing of credit standards.
Demand strengthened for government loans at 46 percent of banks, with large banks seeing a modestly
higher increase.
The report indicated that nearly 15 percent of large banks have eased standards on QM jumbo mortgages.
On non-QM jumbo loans, just 11 percent of large banks noted an easing.
Standards on home-equity lines of credit eased somewhat at 14 percent of banks, with smaller banks seeing more relaxing of guidelines.
Nearly 30 percent of small banks reported increased HELOC demand.
The origination of residential construction loans is expected to rise at 44 percent of banks not considered large.
In the commercial real estate sector, lending standards at the 76 CRE lenders eased somewhat at 8 percent of institutions. At the same time, 15 percent noted moderately stronger demand, with the share rising to 20 percent at just large banks.
Non-farm, non-residential CRE lending is forecasted to
rise by executives at 29 percent of large banks.
But 38 percent of large bankers forecasted a decline in multifamily originations despite that multifamily loan demand was up at more than a quarter of banks.
More than a quarter of respondents said demand for construction-and-land-development loans was moderately stronger.
