Lenders continued to loosen home mortgage credit standards in Q3 2017, per a report from Fannie Mae’s 2017 Mortgage Lender Sentiment Survey. This is good news for homebuyers getting a mortgage, and homeowners seeking to refinance.
Competition Resulting in Easing Home Mortgage Credit Standards
While there are numerous reasons for easing home mortgage credit standards, the primary reason is competition among lenders.
Katie Penote from Fannie Mae suggests that loosening standards could be because, “[T]he net share of lenders reporting growth in purchase mortgage demand over the prior three months has fallen for all loan types year over year, reaching the lowest third-quarter reading in the past two years.”
The news release from Fannie Mae also reported that there was a decline in the number of lenders reporting growth in purchase mortgage demand – and that the demand for all types of loans has fallen. In fact, it was the lowest third-quarter reading within the last two years. However, there are positives as the net share of lenders predict there will be an increase in mortgage demand in Q4 of 2017.
“Lenders further eased home mortgage credit standards during the third quarter, continuing a trend that started in late 2016. In particular, both the net share of lenders reporting easing on GSE-eligible loans for the prior three months and the share expecting to ease standards on those loans over the next three months increased to survey highs,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
What This Means for Borrowers
It’s apparent that competition among lenders has made it a borrower’s mortgage market.
So for homebuyers, the easing of home mortgage credit standards means they have a greater chance of qualifying for a mortgage with better terms and a lower rate. And for homeowners wishing to refinance, it means they have a better change of qualifying for the refinancing options that are best for them.
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