Survey: Fewer Mortgage Lenders Think Credit Box Is Too Tight

About half of mortgage professionals said mortgage credit continues to be too tight and that it is hurting homeownership opportunities for U.S. home buyers, according to a survey conducted by Genworth Mortgage Insurance during the Mortgage Bankers Association’s Annual Convention & Expo recently held in Boston.

Although that seems high, it’s down considerably from 2014, when 61% of mortgage professionals polled said credit was too tight.

Of the 226 executives surveyed on-site, 50% said they believe that overly tight underwriting standards are keeping too many potential buyers on the sidelines, especially first-time home buyers, who are having a hard time meeting down-payment requirements.

Compounding the problem is the fact that inventory of single-family homes is very low right now, which, in turn, is boosting up home prices.

Forty-five percent of respondents said increased compliance burdens were the biggest threat to the housing industry over the next 12 months.

An additional 32% cited borrower access to credit as the biggest threat, while 20% believe the biggest threat is the current rising rate environment. Only about 3% cited lack of progress on government-sponsored enterprise reform as the most severe industry threat.

“This year’s survey data is consistent with the industry’s emphasis on improving credit access for more home-ready home buyers,” said Rohit Gupta, president and CEO of Genworth Mortgage Insurance, in a statement. “While there is certainly more to be done on this front, we are pleased by the gradual progress we have seen over the past two years.”

About 12% of respondents said they feel that tighter underwriting restrictions are still needed. About 38% said they believe the current standards are appropriate; that’s an increase of 24 percentage points compared with the 2014 survey.

Officials at Genworth think the increase in the number of executives who believe the current standards are appropriate reflects a higher comfort level with today’s credit environment.

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