Why It’s Becoming Easier to Qualify for a Mortgage


Fannie Mae has reported that mortgage lenders are continuing to ease their mortgage standards due to mounting market pressures including competition from other lenders. This means underwriting requirements for home purchases are less stringent, which should make it easier to obtain a mortgage loan.

According to the Fannie Mae Mortgage Lender Sentiment Survey for the third quarter of 2017, the number of lenders who reported easing their standards over the previous 3 months reached the highest point since the survey was first started in March of 2014. In fact, the number has increased every quarter since the beginning of 2016.

All Mortgage Loan Types Affected

Mortgage lenders reported easing standards across all loan types. This includes GSE Eligible, Non-GSE Eligible and Government loans.

In fact, the net share of mortgage lenders expecting to see less stringent underwriting standards for GSE Eligible loans over the next three months reached a survey high. And on a year-over-year basis, expectations of easing showed marked improvement for all loan types.

What’s Causing the Trend

“Lenders’ comments suggest that competitive pressure and more favorable guidelines for GSE loans have helped to bring about more easing of underwriting standards for those loans. We believe that the GSEs’ attempts to relieve repurchase concerns and expand credit for creditworthy borrowers have contributed to the easing trend,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist.

“Meanwhile, market competitiveness also led to the fourth consecutive quarter in which lenders’ net profit margin outlook deteriorated. The share of lenders citing competition from other lenders as the key reason for a negative profit market outlook rose to a new survey high,” he said.

Lenders’ net profit margin outlook is significantly lower than it was for the third quarter of 2016. While all sizes and types of institutions expected a decrease in profit margins, according to Fannie Mae, larger institutions were the most likely to do so.

The Mortgage Lender Sentiment Survey polls senior executives of Fannie Mae’s 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 survey was conducted between August 2, 2017 and August 13, 2017.

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