High Regs Stall Mortgage Activity: Survey
Housing finance executives participating in the first monthly survey sponsored by The Collingwood Group reported a link between dealing with new mortgage regulations and the inability to make more money available for mortgage loans.
“Seventy percent of survey respondents attributed a high to extremely high correlation between increased regulation and the need to tighten mortgage credit,” the firm reported. “This indicates that there is a strong relationship between regulation and borrower’s ability to get a mortgage loan.”
The Collingwood Group is a Washington-based financial consultancy that addresses mortgage lending and mortgage regulation.
Data for the firm’s first monthly Mortgage Industry Outlook Report was collected via an online survey of mortgage and housing professionals, various originators, lenders, servicers and other industry participants.
Participants were asked to rate the degree of regulatory involvement in their business from one to 10, with one as extremely low and 10 as extremely high.
Ninety percent of the survey’s participants rated regulatory involvement in their business at eight or above.
Eighty percent rated the degree of impact that regulations had on their business at an eight or above on a scale of one having no impact and 10 having great impact.
“Survey results suggest that industry professionals perceive business conditions to be substantially worse overall than this time last year,”the Collingwood Group said.
Anecdotally, the near 30% decrease in loan applications was somewhat unexpected as interest rates remained steady; lenders anticipated new purchase applications to replace lost refinance business, the firm noted.
“Unfortunately, the number of new home sales was actually down year-over-year and purchase applications were subsequently down 10-15%,” according to the report.
“Furthermore, lending standards have remained stubbornly high as a result of increased regulation and compliance requirements that have actually served to decrease loan volume and dampening current business conditions,” the report read.