Lender Optimism is High Heading Into the Second Quarter

According to the results of the Mortgage Lender Sentiment Survey for the first quarter of 2015, lenders anticipate both increased profits and demand. The survey, which was completed by Fannie Mae and Penn Schoen Berland, indicates that a combination of changing credit standards and an improving economy have led lenders to believe that there will be an increase in demand for all types of purchase mortgage loans. Results held true for institutions of a variety of sizes and types, including credit unions, depository institutions and mortgage banks.

Per the senior vice president and chief economist at Fannie Mae, Doug Duncan, survey results are similar for households and lenders. He states that although there was a slight decline in housing activity in 2014, consumer confidence and an improved employment picture have caused many to believe there will be a housing expansion in 2015.

What is also likely a contributor to improved outlooks is that the credit restrictions seen in 2014 appear to be loosening for 2015. Lenders who participated in the survey averred that credit for all types of loans is becoming more available, with mortgage banks in particular saying this.

The results of the survey indicated that 71 percent of lenders believe that demand for GSE-eligible purchase loans will rise in the next three months, but only 59 percent surveyed in 2014 believed that loan demand would increase for the same quarter. Additionally, 41 percent reported that they expected to see profit margins increase, whereas only 21 percent said that in the same quarter of 2014.

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