Fannie Mae Releases New Mortgage Lender Sentiment Survey Results

Survey Provides Key Insights Into Mortgage Lender Attitudes Toward Housing Market; Complements Fannie Mae's National Housing Survey

Katie Penote

202-752-2261

Fannie Mae today released the inaugural results of its quarterly Mortgage Lender Sentiment Survey. This new industry research initiative tracks insights into current lending activities and market expectations among senior mortgage executives at Fannie Mae’s lending institution partners.

Results collected during the first two quarters of 2014 show greater consumer mortgage demand in the second quarter of the year, a steady and positive near-term mortgage demand outlook, and divergence between larger and smaller lenders in underwriting credit standards.

“This survey of lender attitudes presents current market information that may provide key inputs for all industry participants, including lenders and investors,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “We have been conducting our monthly National Housing Survey for four years to gauge consumers’ views and intentions, which affect the demand side of housing. This new survey of mortgage lenders serves as an indicator of supply-side conditions by assessing their current and expected outcomes. We believe that these two surveys, representing the views of both consumers and lenders, will complement each other to provide deeper market insights.”

Our lender survey results show that consumer purchase mortgage demand has picked up from the first quarter to the second quarter of this year. Regarding the near-term outlook, lenders surveyed continue to report positive expectations, although expected growth remains modest.

“These 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 Duncan.

Additionally, the comparison between responses gathered from Fannie Mae’s Mortgage Lender Sentiment Survey and National Housing Survey (among consumers) shows that mortgage executives are significantly more likely than consumers to say it is difficult for consumers to get a mortgage today. In addition, lenders’ responses to questions regarding credit standards pointed to net tightening among smaller and mid-size lenders, but net easing among larger lenders. 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.”

MORTGAGE LENDER SENTIMENT SURVEY HIGHLIGHTS

Differences in Economic and Housing Sentiment Between Senior Executives and General Consumers

• Compared to general consumers, senior mortgage executives are more optimistic about the overall economy and more pessimistic about consumers’ ability to get a mortgage today.

Improved Consumer Purchase Mortgage Demand Over the Prior Three Months

• Consumer demand reported for single-family purchase mortgages over the prior three months went up on net from Q1 to Q2 2014.

Steady and Positive Consumer Purchase Mortgage Demand Outlook for the Next Three Months

• Senior mortgage executives expect consumer demand for single-family purchase mortgages for the next three months to go up on net.

Divergence in Credit Standards Between Larger Lenders and Others

• Smaller and mid-size lenders are more likely than larger lenders to say their credit standards tightened over the prior three months and are more likely to expect them to tighten during the next three months. Larger lenders, on the other hand, are more likely to say their credit standards eased over the prior three months and they expect standards to ease further during the next three months.

Stable Mortgage Execution Outlook

• As in Q1, most lending institutions surveyed in Q2 2014 reported that they expect to maintain their post mortgage origination execution strategies for the next three months.

Stable Mortgage Servicing Rights (MSR) Execution Outlook

• As in Q1, the majority of lenders surveyed in Q2 2014 reported that they expect to maintain their Mortgage Servicing Rights (MSR) strategies for the next three months.

Improved Profit Margin Expectations for the Next Three Months

• Lenders’ profit margin outlook has improved from Q1 to Q2 2014, as more lenders expect their profit margin over the next three months to stay the same and fewer lenders expect their profit margin to decrease.

This first-of-its-kind 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 first quarter 2014 Fannie Mae Mortgage Lender Sentiment Survey was conducted between March 4, 2014 and March 18, 2014. The second quarter survey was conducted between May 28, 2014 and June 8, 2014. Interviews were conducted by Penn Schoen Berland in coordination with Fannie Mae. For detailed findings from the 2014 first quarter and second quarter surveys, as well as survey questionnaires and other supporting documents, please visit the Fannie Mae Mortgage Lender Sentiment Survey web site. Also available on the site will be special topic analyses, which focus on findings and analyses of important industry topics.