A survey of lending officers at the nation’s banks suggests that demand for loans which don’t meet the Qualified Mortgage Rule standards weakened over the past three months.
On all loans backed by the government-sponsored enterprises, nearly a fifth of the 31 large banks that make such loans said credit standards have eased over the past three months.
But at the 27 banks which were surveyed that don’t meet the large bank classification, the share who have noticed a loosening of GSE credit standards was only seven percent.
That was according to the October 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve Board.
Responses for the report were obtained
from 69 domestic banks and 23 U.S. branches and agencies of foreign banks.
Out of the 58 firms that make home loans which are eligible for GSE purchase, nearly a quarter indicated moderately weaker demand for these loans, though 16 percent noted moderately stronger demand.
Moving on to government residential mortgages, 13 percent of all the 54 banks that do government lending said guidelines have recently tightened.
Demand in the government sector was somewhat stronger at 15 percent of banks and modestly weaker at another 11 percent.
There were 54 banks that indicated they make non-jumbo, non-GSE eligible residential loans that meet QM standards. Of the 30 large banks in this category, 13 percent noted easing standards.
Demand for non-GSE, non-jumbo QMs was moderately weaker at 13 percent of smaller banks.
But of the 52 banks that make non-QM, non-jumbo residential mortgages, less than four percent noted that there has been any change in non-QM standards.
Demand for non-QM, non-jumbo mortgages has receded at a fifth of large banks. Demand has dropped at 14 percent of other-than-large banks.
The decline in non-QM demand, however, could reverse if rates rise and quash refinance activity — driving lenders into non-QM territory.
Nearly 10 percent of the 31 large banks that make jumbo QMs said
guidelines have eased.
Among all the 58 banks that make QM jumbo mortgages, more than 22 percent said demand had weakened. Less than 14 percent noted stronger demand.
On non-QM jumbo loans, there has been little change in credit standards.
Non-QM jumbo demand was
down at more than 15 percent of large banks.
Out of the five banks that make subprime mortgages, one noted tighter standards.
None of the subprime banks indicated any change in demand for their product.
Standards on home-equity lines of credit were basically unchanged at more than 95 percent of the 65 lenders that do them.
But HELOC demand has strengthened, with more than a third of banks citing increased demand. For large banks, the share with greater HELOC demand surpassed 40 percent.
On non-farm, non-residential properties, 13 percent of banks classified as other-than-large noted that credit standards had somewhat tightened.
Demand for commercial mortgages was modestly stronger at more than a third of larger banks and a fifth of non-large banks. At the same time, 13 percent of large banks said demand was moderately weaker.
Multifamily standards were tighter at 18 percent of all banks, though another 10 percent indicated easing.
More than 22 percent of all respondents said multifamily demand was “moderately stronger.”
Standards for construction-and-land-development loans
were tighter at 17 percent of non-large banks and looser at 10 percent of the small-to-mid-sized banks.
C&D demand was stronger at 31 percent of all banks.
