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Fannie Lender Survey Shows Market Optimism, But Concerns Remain

JUL 25, 2014 11:07am ET
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Mortgage executives are optimistic about the direction of the housing industry, but still think it is difficult for consumers to obtain real estate financing.

In its inaugural mortgage lender sentiment survey, Fannie Mae polled senior executives that work with the government-sponsored enterprise and found that lenders have positive expectations for the overall economy, although those expectations are modest.

"These survey results are broadly in line with other major indicators released recently, including the pickup in home sales in May, and also support our expectations of a steady but unspectacular rebound for housing during the second half of this year," said Doug Duncan, chief economist at Fannie Mae in a June 25 press release.

Most lending institutions are projecting to maintain similar mortgage origination strategies during the third quarter compared to the prior quarter. Additionally, only 29% of lenders surveyed expect their profit margin in the third quarter to decrease from the second quarter.

Survey respondents also believe that consumer demand for single-family purchase mortgages will rise over the next three months. But despite this optimism, 81% of those surveyed think it is still difficult for consumers to get a home mortgage today, primarily due to tighter mortgage credit standards, especially for smaller and midsized lenders.

Even though large lenders said they will ease lending standards during the next three months, smaller institutions say they can't do this and still comply with industry regulations. Changing regulatory requirements were cited as the most common reason for tightening credit among all lenders surveyed.

"Lenders have been trying to find ways to manage their operational costs and meet new regulatory rules," said Duncan. "They appear to feel cost constrained and, thus, may be applying more conservative standards in their lending practices."

Fannie Mae said the purpose of the lender survey is to complement its monthly housing survey for consumers.

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