Bankers: Mortgage Market Seriously Restricted by New Rules

Most banks believe new mortgage regulations will reduce credit availability and restrict lending, according to the American Bankers Association’s latest Real Estate Lending Survey.

Around 80% of survey respondents believe new regulations under the Dodd-Frank Act will “measurably” reduce credit availability. About two-thirds indicated plans to restrict their lending to Qualified Mortgages, or non-QM loans targeting certain markets or products.

Regulatory burden and compliance cost rank among the top concerns for bankers. 

“The new mortgage rules are a serious challenge, especially in the near term, for mortgage lending,” said Robert Davis, executive vice president at the American Bankers Association, in a statement. “The problem will last at least as long as bankers calibrate their compliance systems, and perhaps much longer.”

On the bright side, survey participants reported an increase of single-family mortgage loans made to first-time buyers from 11% in 2012 to 13% a year later—the highest since 2007.

The average delinquency rate for single-family loans at banks included in the survey also dropped from 2.40% to 1.87% in 2013. Foreclosure rates dropped from .98% to .73%. 

More than 200 banks participated in the 21st annual Real Estate Lending Survey, with data collected from January 25 to February 28, 2014, mostly based on year-end results. Of the 208 participants, 65% were commercial banks, and 35% were savings institutions. About three-quarters had assets of less than $1 billion. 

Access the 21st Annual ABA Real Estate Lending Survey Report. 

Written by Alyssa Gerace

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