Fannie Mae released the results from its second quarter Mortgage Lender Sentiment Survey, and it seems the professionals are feeling good about the housing market moving forward. The survey, conducted in May, indicated that the majority of lenders had seen an increase in demand for GSE-sponsored (Government-Sponsored Enterprise) purchase mortgages across the previous three months.
Most believe that the trend will continue you on into the next quarter.
About 70 percent of those taking the survey reported an increase in demand. Granted, some might point out that this is roughly the same amount as the results of last year’s survey, which was taken at the same time. Still, this year’s second quarter results represent a dramatic jump from the numbers featured in the first quarter report: a much bleaker 20 percent. Sixty percent of those polled foresee increased demand continuing, also similar to 2015’s results.
Lenders had also reported a new easing of credit standards across the previous three months but, unlike the GSE-sponsored mortgages, don’t see things necessarily getting better in the near future. Their expectations could be defined as rather neutral, which continues the trend that has been in motion since December 2015.
Doug Duncan, the senior vice president and head economist at Fannie Mae, commented on the subtle positivity of lenders.
“Key survey sentiment indicators suggest that lenders remain cautiously optimistic in their market outlook,” he noted. “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. The survey was conducted before the recent May jobs report, and the weaker reported job gains might potentially temper this optimism.”
We touched upon the aforementioned jobs report during last week’s news blast, noting that the weaker-than-expected numbers (only 38,000 jobs added during May) led the Fed to reconsider raising the Federal Interest Rate on Wednesday. As was expected, based on Chairwoman Janet Yellen’s comments, the Fed did not touch the rate.