Mortgage lenders had an excellent second quarter in
terms of profitability according to the Mortgage Bankers Association, and
Fannie Mae’s Lender Sentiment Survey for the third quarter indicates they
expect that situation to continue. Forty-eight percent of respondents believe
their profit margins will increase compared to Q2 while 37 percent say profits
will be about the same. Only 15 percent believe there will be a decline.

 

 

Lenders said
consumer demand had remained strong across all loan types, GSE-eligible,
non-GSE-eligible, and government, and in some cases hit new highs. More lenders
reported that demand for purchase loans grew both for the prior three months and
the next three months and refinance mortgage demand remained extremely strong
in the third quarter on both a look-back and look-forward basis.

 

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“This
quarter’s MLSS results align with the strong housing recovery amid the larger
economic downturn due to COVID-19,” said Doug Duncan, Fannie Mae Senior Vice
President and Chief Economist. “Lenders’ reported purchase mortgage demand for
the prior three months across all loan types have returned from sharp drops to
the levels seen last year for the same quarter. Purchase demand growth
expectations for the next three months reached the highest third-quarter
readings since survey inception. For the third consecutive quarter, lenders’
profitability outlook has remained a strong positive. Pent-up consumer demand,
continued low mortgage rates, and favorable mortgage spreads helped drive
lender profitability
.”


“This quarter, lenders on net continue to report tightening of credit standards
for the prior three months, but expected no further tightening next quarter,”
Duncan continued. “Lenders attributed credit tightening to the uncertainty on
the economic recovery and labor markets resulting from COVID-19. Although the
housing market is showing remarkable strength amid the economic and health
crisis, potential longer-term downside risks remain, including labor market
weakness, low inventory, and home price uncertainty.”

The Mortgage Lender Sentiment Survey 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 third quarter 2020 Mortgage Lender Sentiment
Survey was conducted between August 4, 2020 and August 16, 2020.  

By Jann Swanson , dated 2020-09-14 14:01:49

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Courtesy of Mortgage News Daily

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