Fannie Mae Surveys Show Slightly Higher Optimism About Lenders and Consumers
Written By: Joel Palmer, Op-Ed Writer
In what is potentially good news for mortgage processors and underwriters, home buyers and sellers, and mortgage lenders, are expressing slightly higher optimism about the near term.
According to the latest Fannie Mae Home Purchase Sentiment Index released last week, there is a greater share of consumers who believe it’s a good time to buy a home.
The percentage of respondents to the August survey who said it is a good time to buy a home increased from 28 percent to 32 percent. The percentage who say it is a bad time to buy decreased from 66 percent to 63 percent.
There was a slight decline of respondents who said it is a good time to sell, from 75 percent to 73 percent. At the same time, the number of respondents who said it’s a bad time to sell also decreased from 20 percent to 19 percent.
Fewer people also expect home prices to increase in the next 12 months, according to the survey. The percentage of respondents who say home prices will go up in the next 12 months decreased from 46 percent to 40 percent, while the percentage who say home prices will go down increased from 21 percent to 24 percent.
Respondents are also slightly more optimistic about mortgage rates. The percentage of respondents who expect mortgage rates to increase in the next year decreased from 57 percent to 53 percent.
“Most consumers continue to report that it’s a good time to sell a home – but a bad time to buy – and they most frequently cite high home prices and a lack of supply as their primary rationale,” said Mark Palim, Fannie Mae vice president and deputy chief economist. “However, the ‘good time to buy’ component, while still near a survey low, did tick up for the first time since March, perhaps owing in part to the favorable mortgage rate environment and growing expectations that home price growth will begin to moderate over the next twelve months.”
Mortgage lenders are also feeling slightly more optimistic about the environment. According to the Mortgage Lender Sentiment Survey for the third quarter, 46 percent of lenders believe profit margins will decrease in the next three months. That was down significantly from the 69 percent who forecasted declining profits in the previous quarter.
Those who still expect profits to decrease cited increased competition and changing market conditions. The 15 percent of lenders who said they expect increasing profit margins in the next three months said GSE pricing and policies and strong consumer demand were the top reasons for their positive profitability outlook.
“While lenders continue to overwhelmingly cite increased competition as their primary concern regarding future profitability, the share citing personnel costs for their diminished profit margin outlook increased significantly, suggesting that mortgage lenders’ ability to efficiently manage their workforces will be critical to their bottom lines as competitive pressures remain intense,” said Palim.
Additionally, across all loan types, more lenders this quarter reported reduced consumer demand over the previous three months for purchase mortgages but improved demand for refinance mortgages. Still, the reported change in mortgage demand over the previous three months, as well as expectations for the change in demand over the next three months, remained positive on net for purchase mortgages but still slightly negative for refinance mortgages.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
