Banks Expect New Rules to Reduce Mortgage Availability

Mortgage Banking, May 2014 | Go to article overview

Banks Expect New Rules to Reduce Mortgage Availability


In its 21st annual Real Estate Lending Survey, the American Bankers Association (ABA), Washington, D.C., found that new mortgage regulations are expected by many bankers to restrict access to mortgage credit. The latest survey released on April 7 found that more than 80 percent of those surveyed expect the rules to reduce mortgage credit availability.

Yet the survey also found that the average percentage of one-to-four-family loans made to first-time buyers rose in 2013 among those surveyed. In 2011 that share was 9 percent, but it rose to 11 percent in 2012 and rose again last year to 13 percent.

The survey found that 48 percent of mortgage loans made by bank respondents had borrowers with FICO[R] scores of 720 or higher, while 32.9 percent of loans were to borrowers with scores of 680 to 719. The survey found 16.6 percent of loans were to borrowers with scores between 620 and 679. Just 2.5 percent of mortgages were made to borrowers with credit scores below 620.

The survey asked banks what percentage of last year's mortgage production would have been QM-compliant. Respondents said that 84 percent would have been QM compliant, with 16 percent non-compliant.

The survey found that of those banks planning to make non-QM loans, 95 percent planned to hold the loans in portfolio as investments.

When asked about the impact of QM and the ability-to-repay rules on credit availability in the market generally, 41 percent said there would be a measurable reduction in credit availability across all mortgage segments and 20 percent of respondents said there would be no measurable impact. …

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