Lenders Concerned about Mortgage Demand in 2015

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Mortgage lenders cite weaker consumer demand as the main driving force behind their 2015 outlook for decreased profit margin and report tighter credit standards. This was revealed in the fourth quarter Mortgage Lenders Sentiment Survey conducted by Fannie Mae in November 2014.

The Survey revealed that for GSE-eligible mortgages, the share of mortgage lenders that have tightened their credit standards over the past three months has declined compared to the beginning of the year. In the past three months, only 13% of lenders reported credit standard tightening compared to 28% in the first quarter of the year. For loans, which are not GSE-eligible, the share of lenders who reported easing of the credit standards was greater than the share of those reporting tightening of the standards for a second quarter in a row.

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Despite the reduction in the tightening of credit standards, there was a significant decline in the consumer demand for single-family home purchase loans in the fourth quarter of 2014 compared to the third quarter of the year. The share of lenders that expect mortgage demand to decline further in the first quarter of 2015 has increased.
The vice president and chief economist at Fannie Mae, Doug Duncan, commented that the growing concerns of lenders over the consumer demand for home purchase mortgage loans is in line with the major indicators in the industry. He explained that the data from the Survey supports their view of modest expansion of the housing market in 2015.

Duncan noted that the compliance with government regulations remained the main driver behind lenders’ expectations for decreasing profit margins, but more lenders and large ones, in particular, had growing concerns over the risk associated with consumer demand for their mortgage products. He said that a combination of loosening credit standards, relatively low mortgage rates and continuous improvement in the labor market will help the housing market to achieve steady growth of modest size in 2015.



Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info

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