Per an American Bankers’ Association’s Real Estate Lending Survey released recently, tight regulations have never been helpful in serving the business objectives of bankers. A good 95 percent of bankers say current regulations are basically hindering credit availability towards consumers. They highlight the toll in cost that they needed to integrate into their processes for compliance. The report was released during the association’s annual Real Estate Lending Conference in Orlando, Florida.
Among the highlights of the report include the fewer non-qualified mortgage originations in 2016. In total, they have originated 5 percent less in non-qualified mortgages last year. In 2015, non-qualified mortgages made up 14 percent of all mortgage originations but decreased to only 9 percent in 2016. Over 30 percent of these bankers stopped originating non-QM loans due to the stricter regulations.
ABA EVP Bob Davis says “Non-QM loans have been subject to heightened regulatory requirements and risk, reducing the willingness of banks to extend these loans to even the most creditworthy borrowers. Despite ongoing regulatory hurdles, community banks remain resilient in their ability to manage risk levels, increase productivity and introduce more first-time homebuyers into the market.”
The survey yielded some surprising numbers, aside from the highlighted non-QM decline. In its 24 years of establishment, first-time homebuyers mortgage lending on single-family abodes hit the highest. Last year’s record was a 16 percent rise from the previous year’s.
Foreclosures fell as well. In 2015, foreclosures were at 0.63 percent. This year, it decreased to just 0.37 percent.
Meanwhile, delinquencies on single-family home loans increased to 1.42 percent from 1.27 percent in 2015.
It also appears that consumers still bank on stability by the number of fixed-rate mortgage originations which remains the most popular loan type, according to the survey.
Aside from the tightened regulations, other concerns among realtor circles include the rising interest rates, continued scarcity in available housing, and the increasing cost of operation.
The survey was participated by 159 banks, 76 percent of which with less than a billion dollars in assets.