Lenders forecast rosy spring for mortgages

Mortgage lenders expect increased demand and profit margins as we head into spring, according to Fannie Mae’s first-quarter 2015 Mortgage Lender Sentiment Survey.

According to the survey, released today, an improved economy and relaxed credit standards are fueling optimism among lenders as the first quarter comes to an end.

After gradually trending down throughout 2014, lenders’ purchase mortgage demand expectations for all types of loans (GSE eligible, non-GSE eligible and government loans) increased this quarter across institution sizes and types (mortgage banks, depository institutions and credit unions), although there might be seasonal influences, the survey found.

For GSE-eligible purchase loans, 71 percent of lenders surveyed said they expect purchase mortgage demand rise in the next three months, compared with 59 percent reported during the same quarter last year. Additionally, 41 percent of lenders reported increased profit margin expectations, up from 21 percent during the same quarter in 2014.

Results also showed that the credit tightening observed last year has continued to trend down gradually moving into 2015. Across all loan types, lenders said credit is easing, and mortgage banks were more likely than depository institutions to agree with this sentiment.

Senior mortgage executives indicated they are more optimistic about the overall economy, but more pessimistic about consumers’ ability to get a mortgage today.

“The first quarter results mirror a similar trend among American households,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “These results are consistent with our view that an improving economy, strengthening employment and increasing consumer confidence should support a modest housing expansion in 2015, after an uneven and disappointing year for housing activity in 2014.”

Lenders’ profit margin outlook has improved significantly from last year, particularly for larder lenders.

The survey was conducted between Feb. 4 and Feb. 16 by Fannie Mae and Penn Schoen Berland.

Email Amy Swinderman.