2nd-Quarter Lender’s
Sentiment Survey:

Mortgage Lenders to Ease Credit Standards Further Credit Easing seems to have become the norm this mortgage season. More mortgage lenders, compared to last quarters sentiment survey, say they have eased credit standards and may further ease in the coming months.

What types of loans are lenders planning to ease in the next 3 months?

Lenders are planning to ease credit standards for government-sponsored enterprise (GSE)-eligible, non-GSE-eligible and government loans. This is because lenders expect to grow GSE (Fannie Mae and Freddie Mac) and Ginnie Mae shares over the next 12 months and reduce portfolio retention and whole loan sales shares.

Why are lenders planning to ease credit standards?

Lenders are planning changes in lending standards because of concerns regarding economic conditions.

Primary Concerns

  • Slow mortgage lending
  • Rise in home prices
  • Increase in competition

Secondary Reasons

  • Reduced compliance concerns
  • More support from GSEs

Demand Growth Comparison:

More lenders report that the demand growth for all loan types have fallen lower than what it was in Q2 2016 and Q2 2015. However, the net share of lenders expecting growth in demand for the ensuing quarter remains the same for the year over year quarter.

Profit Margins

More lenders now expect a decrease in profit margin over the next three months. However, the net share of lenders reporting a negative profit margin outlook has declined since the worst reading in Q4 2016.


The report says larger institutions are more likely to see a net increase in profit margin. Midsize institutions may witness a fall in profit margin.