Lenders are more bullish on the housing recovery today than they have been in three years, with 71% indicating home prices are rising at a sustainable pace in the context of mortgage lending risk.
In its quarterly survey of bank risk professionals, FICO (NYSE: FICO) found “overwhelmingly” respondents believe home prices are rising sustainable with 85% believing the level of mortgage delinquencies will stay the same or will decrease.
The picture is more positive than it has been in recent memory.
“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 FICO Labs. “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.”
Beyond mortgage lending, the survey response indicated credit health is improving among other loan types as well including care loans, credit cards and home equity lines. The respondents are less optimistic about student loans, but 39% agree delinquencies will remain steady or decrease over the next six months.
Written by Elizabeth Ecker