Lenders agree that housing recovery is real

April 10th, 2013

A large number of lenders perceive housing recovery to be sustainable and consistent.

While potential buyers and sellers may be questioning whether the recent months of housing gains indicate market recovery, the majority of lenders agree that housing recovery is occurring and will continue to do so consistently.

FICO released the results of its quarterly survey of U.S. bank risk professionals and found that 71 percent of lenders believe housing prices are rising at a consistent and sustainable rate. Another 39 percent of survey respondents said they expect mortgage delinquencies to fall over the next six months, while 45 percent said delinquencies will likely remain flat during this period. FICO notes that results are the most positive and optimistic it has seen in the last 12 quarters since the survey began.

“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 Andrew Jennings, chief analytics officer at FICO. “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.”

Lender optimism represents good news for buyers, as mortgage companies may be more likely to loosen the reins on credit in the future.