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40 CONSUMERS SHOW RENEWED CONFIDENCE IN HOUSING RECOVERY After starting the year on a low note, consum- er attitudes toward housing brightened overall in February, according to Fannie Mae. Asked about home price trends over the next year, 50 percent of respondents in Fannie Mae's February National Housing Survey said they expect improvements, a recovery from a slide to 43 percent in January. A slightly larger number of consum- ers anticipate price declines—7 percent, up from 6 percent—while the share of those forecasting no significant movement was down to 38 percent. Having dropped 1.2 percentage points to start the year, the average home price change expecta- tion rebounded just as sharply to 3.2 percent, matching the December survey. at renewed confidence in home prices spurred a boost in those saying now is a good time to buy a home; that number was up 3 percentage points from January to 68 percent. At the same time, though, the share of respondents saying they think it would be easy for them to get a mortgage right now retreated from January's all- time high of 52 percent, falling back to 45 percent. Doug Duncan, SVP and chief economist at Fannie Mae, said the up-and-down nature of the last few surveys fits with the "noisy economic and housing data published over the past few months." "[W]e've seen a corresponding increase in volatility in our survey results, particularly for home price expectations and perceptions about the ease of getting a mortgage," Duncan said. "Despite the volatile month-to-month changes, we believe that the housing recovery is continuing but is not yet robust." Gauging consumer attitudes about the economy, Fannie Mae found Americans were considerably more downbeat than they have been recently. irty-five percent of respondents said they believe the economy is on the right track— down 4 percentage points—while 57 percent say it's on the wrong track, a small bounce after four straight months of declines. Twenty-four percent of consumers said their household income is significantly higher than it was 12 months ago, an increase of 2 percent- age points. Meanwhile, 36 percent said their expenses have grown substantially, an increase of 4 percentage points. Noting a 6-percentage-point jump over the last two months in the share of consumers citing higher household expenses, Duncan speculates that weather may have played a large role in any declines in economic optimism. "is response would be consistent with higher home heating costs," he explained. Nevertheless, at least a few consumers seem to think these higher costs will stick: e number of respondents who expect their personal financial situation to improve in the next year fell slightly to 43 percent, while those expecting things to get worse ticked up to 15 percent. FED SURVEY FINDS INCREASED INTEREST IN RMBS e Board of Governors of the Federal Re- serve System released findings from its Senior Credit Officer Opinion Survey for March. e report found that credit officers are experi- encing an increased demand for residential mortgage-backed securities (RMBS). e survey was conducted over the prior three months to collect qualitative informa- tion on changes in credit terms and conditions in securities financing and over-the-counter (OTC) derivatives markets. e survey noted, "e 22 institutions participating in the survey account for almost all of the dealer financing of dollar-denominated securities provided to nondealers and are the most active intermedi- aries in OTC derivatives markets." e survey's results offer a few insights. A third of all respondents reported an increase in resources and attention paid "to the management of concentrated exposures to central counterparties and other financial market utilities." e figure represents the lowest value since the question was added to the survey in September 2011. Financial leverage remained unchanged over the three-month period. However, two- fifths of dealers reported a decline with respect to trading real estate investment trusts (REITs). e survey results concluded, "With regard to securities financing, nearly one-half of dealers reported an increase in demand for funding of non-agency residential mortgage- backed securities (RMBS), and two-fifths of respondents also noted increased demand for term funding against such collateral." Dealers found that liquidity and function- ing have improved in the non-agency RMBS market. Loan officers reported that "conditions in the cash markets for other collateral types were reported to be basically unchanged." Rate reduction modifications are facing resets Source: Black Knight Financial Services Mortgage Monitor STAT INSIGHT 95%

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