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U.S. mortgage lenders sentiment in Q4 hits 5-year low
Last Updated: 2018-12-13 09:54 | Xinhua
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The Federal National Mortgage Association, better known as Fannie Mae, said on Wednesday that the net profit outlook for U.S. mortgage lenders dropped to a five-year low in the fourth quarter of 2018.

The low sentiment resulted from a decline in loans demand and refinance activity for existing mortgages, said Fannie Mae.

"Lenders are reporting the lowest purchase mortgage demand expectations across all loans types and the worst refinance demand expectations for GSE-eligible loans in the survey's five-year history," said Doug Duncan, senior vice president and chief economist at Fannie Mae.

GSE-eligible loans stand for the type of loan that are eligible for purchase, guarantee, or insurance by a government-sponsored enterprise (GSE). Founded in 1938, Fannie Mae is one of the top-tier GSE in the United States.

Speaking of the concerns among the lenders, Duncan noted that "stressful conditions continue to hang over the mortgage industry."

Fannie Mae found that "competition from other lenders" became the top reason for lenders' decreased profit margin outlook for the eighth consecutive quarter. Meanwhile "consumer demand" was the second top reason, reaching an all-time survey high as well.

"Rising mortgage rates and lean inventory amid solid home price appreciation have discouraged both first-time and trade-up homebuyers," said Duncan, "however, mortgage rates have shown signs of stabilization, and annual home price gains have slowed from the red-hot pace seen earlier this year."

"While 2018 is likely to end up a disappointing year for the housing and mortgage industries, continued strength in demographics and the labor market offers hope that conditions should stabilize and may even improve next year," Duncan added.

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