NAHB: Banks report weaker demand for home loans

The Federal Reserve Board’s opinion survey of bank lending practices showed a “significant net share” of banks reporting more relaxed lending standards and weaker demand for most categories of lending. residential real estate loans in the first quarter, according to the NAHB. Large net bank shares signaled weaker demand for all categories of RRE loans other than subprime residential mortgages.

Meanwhile, lending standards and demand for all categories of commercial real estate (CRE) loans, except multifamily loans, remained unchanged. For loans secured by multi-family residential properties, banks reported looser lending standards and stronger demand. In the first quarter of 2022, net demand for multifamily loans was 18.5% stronger. In the survey, 26.6% of banks reported moderately stronger demand and 66.2% of banks reported unchanged demand. The issues were subdivided between large commercial banks and other commercial banks.

Bank lending standards for loans secured by non-residential non-farm property remained unchanged from the previous quarter and demand for such loans also remained unchanged.

Demand for residential real estate loans was weakest for qualified mortgages (QMs), with 51.9% of banks reporting weaker demand. 17.6% of banks reported higher demand for home equity revolving lines of credit, outpacing the shares of banks reporting higher demand in other RRE categories. Bank lending standards have eased most visibly for jumbo QM and non-QM loans, the segment that excludes many first-time home buyers.

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