Lenders Loosen Mortgage Standards, as Demand Falls

Same phenomenon leading up to the last housing bust?
The toxic combination of ‘competition from other lenders’ and slowing mortgage demand is cited by senior executives of mortgage lenders as the source of all kinds of headaches for the mortgage lending industry.
Primarily due to this competition amid declining of demand for mortgages, the profit margin outlook has deteriorated for the fourth quarter in a row, according to Fannie Mae’s Q3 Mortgage Lender Sentiment Survey. And the share of lenders that blamed this competition as the key reason for deteriorating profits ‘rose to a new survey high.’
And demand is down for all three types or mortgages:
Mortgages eligible for guarantees by Government Sponsored Enterprises, such as Fannie Mae and Freddie Mac (‘GSE Eligible’), indirectly backed by taxpayers. Mortgages not eligible for GSE guarantees (‘Non-GSE Eligible’), not backed by taxpayers Mortgages guaranteed by Government agencies, such as Ginnie Mae, directly backed by taxpayers.

This post was published at Wolf Street on Sep 25, 2017.