Lenders are more bullish on the housing recovery now than they have been in the last several years, according to the results of FICO’s quarterly survey of bank risk professionals.
The survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), found that 71 percent of bankers polled believe home prices are “rising at a sustainable pace” in the context of mortgage lending risk.
In addition, the majority of bankers—59 percent—expect the supply of credit for residential mortgages to meet demand over the next six months; a slightly larger percentage (60 percent) expect the supply of credit for refinancing to meet demand.
On the credit health side, 39 percent of respondents expect mortgage delinquencies to fall over the next six months, while another 45 percent expect delinquencies to remain flat. Sixteen percent anticipate an increase in delinquencies, making this first-quarter survey the most optimistic since the surveys started.
“The latest survey results, combined with data that indicates the real estate market is improving in many regions, paint a positive picture for a sector of the economy that has been slow to join the recovery,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICOLabs. “Mortgage lenders have been understandably guarded over the past five years. The improvement in their sentiment should be welcome news, and I wouldn’t be surprised to see lenders cautiously expanding their mortgage and home equity lending businesses.”
According to FICO, banker optimism extended beyond mortgage lending last quarter: Large majorities of survey respondents believe that consumer credit health is improving across most types of loans. Respondents were most confident in home equity lines of credit, with 81 percent expecting delinquencies to remain steady or decrease in the next six months.
The survey also asked respondents about the business priorities at their institutions for 2013. Two related topics took the top spot: utilizing Big Data analytics to gain greater insight into consumers and improving the customer experience. Both were named as the top priority by 35 percent of respondents. Also important: fraud prevention (20 percent of respondents) and utilization of mobile technology (9 percent).
By Tory Barringer