ABA Survey Finds Reg Burden Still Holding Back Mortgage Lending

A majority of bankers — 77 percent — agree that burdensome mortgage regulations continue to have a negative effect on business production, according to the American Bankers Association’s 25th annual Real Estate Lending Survey released today. Nearly three in four said that Qualified Mortgage rules in particular have reduced credit availability.

Bankers noted that higher debt-to-income levels, in addition to less complete documentation, continue to be the most common factors preventing mortgage loans from meeting QM standards. The survey also noted that 90 percent of the typical bank’s mortgage loans made last year were qualified mortgages, indicating that banks are continuing to limit the extension of non-QM loans. More than 28 percent of banks said they were restricting mortgage lending to QM segments only.

“The survey shows how the current rules are making it difficult for banks to fully serve their communities,” said ABA EVP Bob Davis. “The good news is Congress is currently considering legislative changes that would allow a greater portion of creditworthy borrowers access to mortgages.”

Despite regulatory challenges, banks continue to report positive trends in loan productions. Single family loans for first-time home borrowers ticked up to 17 percent from 16 percent in 2016. Foreclosure rates were up slightly from last year’s survey, while delinquency rates fell from 1.42 percent to 1.29 percent. Looking ahead to the rest of 2018, bankers said they were most concerned about rising interest rates, regulatory burdens, lack of housing inventory and increased business costs.