The National Association of Realtors recently released findings from its 15th Survey of Mortgage Originators, detailing lenders’ experiences during the second quarter of 2017.
The association surveyed 135 lenders for their take on the future impact of Fannie Mae’s increase to its debt-to-income (DTI) ratio, as well as the Federal Reserve’s decision to end its program of reinvesting its portfolio of treasuries and agency mortgage-backed securities.
Regarding the Fed’s decision to lessen its balance sheet and end its reinvestment program, 28.6 percent of respondents believe that the change will cause rates to rise, and 42.9 percent said that rates will rise and become more volatile. Only 7.1 percent said they do not expect the change to affect rates.
Forty percent of respondents indicated that the impact from the reinvestment program’s conclusion would be felt in advance of implementation; however, 30 percent said that the full impact will take from six to 12 months to be absorbed and another 20 percent said it will take up to two years. Most respondents said they expect the end of the program to result in an increase of 50 basis points in average mortgage rates.
The findings indicate that 57.1 percent of lenders surveyed believe that Fannie Mae’s decision to increase its DTI cap to 50 percent from 45 percent would expand access to credit and more borrowers would take advantage of the change. Conversely, only 21.4 percent believe that credit demand for a higher DTI cap already is met by the Federal Housing Administration and 7.1 percent indicated that Fannie Mae opened the door for too much risk with the change.
“Lenders expect stronger growth for all groups that fall within the Qualified Mortgage (QM) space, but in particular for rebuttable presumption lending, while investor interest is expected to improve for non-prime but remain weak,” the survey states.
Fifty percent of survey respondents indicated a willingness to originate non-QM. That represents the lowest percentage in the past three quarters, according to the survey.