What is a Mortgage Location Survey?

 

In the last ten years, the banking service most contracted by citizens is consumer loans, well mortgages. The withdrawal or deposit of cash is the most common operation of customers with their banks, followed by transactional processes. At the same time, the request for advice or contracting a savings or investment product is less frequent.

 

What is a mortgage location survey?

 

Affiliation with banking entities leads customers to go for mortgage location surveys. The survey gathers the current predisposition that citizens have to request a mortgage or a loan from a bank and the frequency they take out insurance associated with both services.

 

 


Application for mortgages 

 

The most recurrent procedures carried out by mortgage applicants with their banking entities are the withdrawal or deposit of cash and transactional operations. On the other hand, requesting professional advice and contracting a savings or investment product are tasks clients carry out with little or no frequency. This dynamic is repeated in large urban centers and less populated regions. Before contracting a secured loan, a mortgage location survey of the particular area and its measurement is carried out for loan purposes. It also indicates that they like to compare at least two different entities before proceeding to the final signature.

 

Hiring an insurance

 

When interested in contracting a financial service, 84% of those surveyed indicated that their trusted bank offered them the possibility of acquiring insurance associated with the mortgage or personal loan they were requesting. For the most part, life and home insurance caused its contracting opportunity to increase to 95% when the client was looking to sign a mortgage with his bank.

 

This offer of insurance by banks is a common practice throughout the national territory. This phenomenon is less frequent compared to other regions. However, contracting one of the insurance policies suggested by the bank was necessary to formalize the granting of a mortgage or personal loan. This proportion increases to 74% in the case of mortgages and decreases to 53% for consumer loans.

 

The objective of the mortgage location survey is to analyze the quality of information on indebtedness. To do this, we implement a crossing of this data with the administrative data that contains the entire universe of outstanding loans every month.

 

To minimize differences associated with discrepancies in household composition, banks perform the analysis on both the total linked sample and a subset of comparable households. As regards non-mortgage debt, the differences are greater but not substantial. In addition, the availability of detailed information provided by the mortgage location survey on the characteristics of the location and the respective debts allows identifying the applicant. The reference and the existence of shared obligations with people who do not belong to the family are the characteristics that are most closely related to the discrepancies. This analysis contributes to improving the collection of information and of the protocols for interviewing the families.

 

Conditions for mortgage loans are increasingly restrictive.

 

The percentage of banking entities whose conditions for granting mortgage loans are more demanding increased from 0 to 36%. The mortgage location survey corroborates how demanding the requirements for giving credit have become for the different portfolios, except for consumption, in which they remain more or less stable. In the portfolios corresponding to households and large companies, the requests decrease.

Although the granting of consumer loans has been made more flexible after the mortgage location survey, the proportion of banks with more restrictive conditions has increased. In contrast, the percentage with more flexible conditions drops.

 

Loans to companies

 

At the end of this year, the number of loans granted to real estate and construction companies begins to contract. It is so that the percentage of banks with more restrictive credit conditions increases to 82% for real estate companies and 60% for construction companies, whose values were 18 and 9%, in the previous quarter, respectively.

 

Demand

 

The demand for consumer credit has decreased in the household segment, which contrasts with what was reported in previous quarters, while applications for mortgage loans are decreasing. The proportion of banks demanding consumer credit is greater concerning mortgage loans.

 

What's the current scenario?

 

The survey shows that in the first quarter of 2022, the criteria for granting loans to companies had already been tightened in greater uncertainty, supply problems for some products, and rising energy costs and other raw materials.

 

By size of the companies, the document reflects that the concession criteria were tougher for SMEs than large companies. Along these lines, the percentage of denied funding requests increased slightly.

Looking ahead to the second quarter of the year, banks anticipate a new tightening of the granting criteria and a slight drop in demand.

 

In the case of loans granted to households between January and March, the granting criteria remained stable, both in mortgage financing and consumer loans. The general conditions applied to new mortgages would have relaxed slightly due to strong competition, translating into a reduction in the margins applied to ordinary loans.

 

The survey indicates that according to the banks' perception, the demand for mortgages amplified in the first months of the year. In this way, the supervisor means that "the growing uncertainty" that was unleashed in March, with the outbreak of the Russian invasion of Ukraine, would not have yet significantly affected mortgage applications.

 

Instead, for the second quarter, we anticipate "a certain tightening" of the concession criteria and a drop in demand, which would interrupt the upward trend recorded in the last four quarters.

Regarding the general conditions of loans for consumption and other purposes, they remained unchanged during the year's first three months. Despite this, the percentage of denied funding requests grew slightly.

 


 

 

According to the responses received, the survey shows that the demand for consumer credit would have increased again during the first quarter of 2022, driven by higher spending on durable consumer goods and by greater consumer confidence. However, as with mortgage loans, financial institutions expect a generalized contraction in the supply of credit for the second quarter of the year. In this sense, they foresee that the criteria for granting loans will tighten slightly, and they anticipate a slight decrease in demand. This gives us a clear picture of the importance of a mortgage location survey.

 

Learn more about residential mortgages and home financing at American Mortgage Source (Broker Company in OKC)

 

 

 

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