Prime Residential Mortgage

Mortgage Standards Stop Tightening; Does It Apply To You

August 8, 2012 by · Leave a Comment 

Fed Senior Loan Officer SurveyAs another signal of an improving U.S. economy, the nation’s biggest banks have started to loosen mortgage lending guidelines.

Per the Federal Reserve, no “big banks” reported stricter mortgage standards last quarter as compared to the quarter prior and “modest fractions” of banks reported easier mortgage standards. 

The data comes from the Fed’s quarterly Senior Loan Officer Survey, a questionnaire sent to 64 domestic banks and 23 U.S. branches of foreign banks.

Click here to see today’s mortgage rates.

The survey is meant to gauge, among other things, direct demand for consumer loans and banks’ willingness to meet this demand.

Not surprisingly, as mortgage rates fell to all-time lows last quarter, nearly all responding banks reported an increase in demand for prime residential mortgages. “Prime residential mortgage” is defined as a mortgage for an applicant whose credit scores are high; whose payment history is unblemished; and, whose debt-to-income ratios are low.

Consumers were eager to buy homes and/or refinance them last quarter and 6% of the nation’s big banks said their credit standards “eased somewhat” during that time frame. The remaining 94% of big banks said standards were left unchanged.

Click here to see today’s mortgage rates.

The ease of getting approved for a home loan, however, is relative.

As compared to 5 years ago, Schererville Indiana home buyers and rate shoppers face a distinctly more challenging mortgage environment.

Today’s minimum FICO score requirements are higher by up to 100 points depending on the loan product. Plus, applicants face new income scrutiny and must also demonstrate a clearer capacity to make repayments.

Click here to see today’s mortgage rates.

Tougher lending standards are among the reasons why the national home ownership rate is at its lowest point since 1997. It is harder to get mortgage-approved today as compared to late-last decade.

For those who apply and succeed, the reward is access to the lowest mortgage rates in a lifetime. Mortgage rates throughout Indiana continue to push home affordability to all-time highs.

If you’ve been shopping for a home or plan to refinance, it’s a good time to commit with mortgage rates low.

Click here to see today’s mortgage rates.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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