More Mortgage Lenders Feeling Positive on Purchase Demand, Profit Margin, Credit Standards

Survey Results Reflect Optimistic Outlook for Housing in 2015

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Jun 17, 2015, 09:00 ET

WASHINGTON, June 17, 2015 /PRNewswire/ -- Mortgage lenders remain optimistic about purchase mortgage demand and their profit margin during the next three months, according to Fannie Mae's second quarter 2015 Mortgage Lender Sentiment Survey™. Conducted in May, the survey shows that lenders' near-term outlook for both purchase demand and profit margin remains at high levels, and above the 2014 survey results. Additionally, more lenders have continued to report credit loosening than tightening.

"This quarter's results showed that the growing optimism of lenders has been rewarded," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "The share of lenders reporting increased purchase mortgage demand over the prior three months reached a survey high for both GSE-eligible and government loans. At the same time, the positive gap grows between lenders reporting loosening or maintaining existing credit standards, relative to those reporting tightening. While not matching first quarter 2015 levels, the profit margin and purchase mortgage demand expectations over the next three months remain above the 2014 readings. The results, when taken together with the continued positive trend in consumer attitudes shown in the recently released National Housing Survey™, reinforce an increasingly optimistic outlook for housing in 2015, consistent with our forecast. We expect a continued housing expansion in 2015 after an uneven and disappointing 2014."

MORTGAGE LENDER SENTIMENT SURVEY HIGHLIGHTS

Differences in Home Price Sentiment Between Senior Mortgage Executives and General Consumers

Senior mortgage executives are increasingly optimistic, and significantly more optimistic than the general population of consumers, about future home prices. This quarter, the share of lenders expecting home prices to go up over the next 12 months reached a survey high of 70%.

Increased Consumer Purchase Mortgage Demand Reported over the Prior Three Months

The share of lenders reporting increased mortgage purchase demand over the prior three months climbed again this quarter, reaching a survey high for GSE-eligible and government loans (77% and 65%, respectively). For the next three months, the share of lenders reporting increased demand expectations fell this quarter from last quarter, but remains at a high level and above the 2014 readings, and may reflect some seasonality influences.

Continued Gradual Easing of Credit Standards

Credit tightening observed last year has continued to gradually trend down. The positive gap grows between lenders reporting loosening or maintaining existing credit standards, relative to those reporting tightening.

Stable Mortgage Execution Outlook

Most institutions reported that they expect to maintain their strategy in relation to secondary market outlets over the next 12 months. More lenders expect to increase rather than to decrease the shares of loans originated and then sold to GSEs.

Stable Mortgage Servicing Rights (MSR) Execution Outlook

The majority of institutions expect their current mortgage servicing rights (MSR) execution strategies to stay about the same over the next 12 months.

Slight Dip in Profit Margin Outlook for the Next Three Months

Although lenders' profit margin outlook across institution sizes fell slightly this quarter from last quarter (Q1), with more lenders reporting decreased profit margin expectations over the next three months, it remains similar to the 2014 readings.

The Mortgage Lender Sentiment Survey™ conducted by Fannie Mae polls senior executives of its lending institution customers on a quarterly basis to assess their views and outlook across varied dimensions of the mortgage market. The Fannie Mae second quarter 2015 Mortgage Lender Sentiment Survey was conducted between May 7, 2015 and May 17, 2015 by Penn Schoen Berland in coordination with Fannie Mae. For detailed findings from the second quarter 2015 survey, as well as survey questionnaires and other supporting documents, please visit the Fannie Mae Mortgage Lender Sentiment Survey page on fanniemae.com. Also available on the site are special topic analyses, which focus on findings and analyses of important industry topics.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

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SOURCE Fannie Mae