The Q3 release of the Senior Loan Officer Opinion Survey indicated broad-based gains in demand and relaxed lending standards across most loan categories. This could bode well for economic growth moving forward.
Prime Time for the Mortgage Market
Recent data from the Senior Loan Officer Opinion Survey (SLOOS) for Q3 painted a picture of broad-based continued improvements in the lending market across most categories of loans.
Following three quarters of declines in demand and two quarters of tighter lending standards, the mortgage market finally caught a break in Q3-2014. The major gains were in prime mortgages, as 45.1 percent of banks reported stronger demand and 18.3 percent of banks relaxed lending standards. Nontraditional mortgages also saw an improvement, but to a lesser extent than prime mortgages, with 14.3 percent reporting an increase in demand and only 5.6 percent of banks relaxing standards. The housing market has seen sluggish growth in the first half of the year following harsh winter weather and negative economic growth in the first quarter. This was witnessed recently by lower-than-expected data for housing starts, new home sales and pending home sales. Easier lending standards and increased demand for mortgages could give the housing market a welcome pickup for the rest of this year.
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