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Tuesday, August 5, 2014

Fed Survey: ATR/QM Rule Lowers Mortgage Approvals

About half of the banks participating in the Federal Reserve’s latest senior loan officers survey reported that the CFPB’s ability-to-repay/qualified mortgage rule had reduced approval rates on applications for prime jumbo home-purchase loans and for nontraditional mortgages.

A majority of large banks but only about half of all other banks said the rule has had no effect on approvals of prime conforming mortgages, in part because they qualify for the safe harbor for mortgages that pass the GSEs' automated underwriting models.

The survey also found that banks continued to ease lending standards and terms for many types of loan categories amid a broad-based pickup in loan demand. A small percentage of respondents reported having eased standards on commercial and industrial loans over the past three months, while moderate to large fractions of banks reported having eased various terms on such loans.

On the demand side, a significant fraction of banks reported stronger demand for C&I loans from firms of all sizes. They attributed the increased demand to customers' need to finance investments in plant or equipment, accounts receivable, inventories, or mergers or acquisitions.

Read the survey report.

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