US Residential Mortgage Demand Eases in Q2

According to an NAHB review of the Federal Reserve’s Senior Loan Officer Opinion Survey (SLOOS) for Q2, overall demand for residential mortgages weakened, while lending standards for most types of residential mortgages were essentially unchanged.

For commercial real estate (CRE) loans, lending standards for construction and development were modestly tighter, while demand was moderately weaker. In contrast, for multifamily loans within the CRE category, lending conditions and demand were essentially unchanged for the third consecutive quarter.

Residential Mortgages

In Q2, five of seven residential mortgage loan categories recorded a neutral net easing index (0) for lending conditions. Qualified Mortgage (QM) non-jumbo, non-GSE eligible loans were the only category to show easing, with a net easing index of 1.8. The only loans to experience tightening were non-QM, non-jumbo loans, at -2.0.

However, under the Fed’s classification, any reading between -5 and 5 is considered “essentially unchanged,” meaning all seven categories fell within this range.

Commercial Real Estate Loans

Among CRE loan categories, construction and development loans posted a net easing index of -9.7 in Q2, indicating modestly tighter credit conditions. Multifamily loans recorded a net easing index of -4.8, or essentially unchanged. Both categories have shown tightening since 2022Q2; although for multifamily, the tightening has moderated, with the net easing index remaining in the “essentially unchanged” range for three consecutive quarters.