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
