Fannie Mae’s Second Quarter 2016 Mortgage Lender Sentiment Survey

Lender attitudes toward the housing market are positive heading into third quarter 2016, having recovered from a significant decline in recent quarters, according to Fannie Mae’s second quarter 2016 Mortgage Lender Sentiment Survey.

Conducted in May, the survey shows that lenders reporting demand growth for GSE (government-sponsored enterprise) eligible purchase mortgages in the past three months rebounded to 70 percent on net, compared with 20 percent in the previous quarter and 71 percent a year ago. Lenders’ purchase demand expectations for the next three months also remain near the levels seen during the same period last year—dipping slightly for GSE eligible and non-GSE eligible mortgages to 60 percent and 43 percent, respectively, but rising to 58 percent for government loans.

While lenders also reported a moderate net easing of credit standards across all loan types during the previous three months, expectations to ease standards during the next three months have gradually ticked downward on net since fourth quarter 2015, with most lenders expecting to keep their credit standards unchanged. For GSE eligible loans, only 4 percent of lenders on net expect to further ease credit standards within the next three months.

“Key survey sentiment indicators suggest that lenders remain cautiously optimistic in their market outlook,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “The outlook for purchase demand growth over the next three months returned to levels similar to last year, while the outlook for refinance demand and profit margin improved moderately versus last year’s levels.

“Additionally, the trend toward easing of credit standards appears to be tapering off, as the vast majority of lenders, around 90 percent, reported plans to keep their credit standards about the same,” he adds. “The survey was conducted before the recent May jobs report, and the weaker reported job gains might potentially temper this optimism.”

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