Mortgage Lenders Tighten Standards Even as Demand Increases
Mortgage lenders are tightening their standards for those looking to buy a home. Demand for traditional home mortgage loans is increasing, but lenders aren’t always lending. Indeed, many mortgage lenders are tightening their standards further, concerned that they will end up with more defaults on their hands. MarketWatch reports on the concerns had by lenders of all stripes:
Almost all banks said they expected more delinquencies. For C&I loans, 73% on net expected credit quality to worsen. For commercial real estate, 90% on net expected loan quality to worsen (one bank expected quality to improve). For consumer credit cards, 83% on net expected quality to worsen. Similar majorities expected further worsening in all types of mortgages.
Homebuyers seek more traditional home mortgage loans
Demand for homes is up (as one might guess from pending home sales data), and so is demand for traditional home mortgage loans. Many people have become disenchanted with non-traditional mortgage loans, such as ARMs, hybrid ARMs, interest only and subprim home mortgage loans. The idea of “upgrading” to a bigger house doesn’t seem so appealing now with all of the foreclosures going on. Indeed, it appears that most folks have learned a lesson about home mortgage loans: Get a traditional mortgage that you can afford now — and probably still afford in five to seven years.
Unfortunately, even as more homebuyers express an interest in traditional home mortgage loans, they are becoming more and more difficult to obtain. Mortgage lenders are reluctant to lend, and it is taking a bit higher credit score and a down payment in order to purchase a home these days.
But if you can get approved for a home mortgage loan, chances are that you’ll get a great deal. Home prices are still low, and mortgage loan rates are also at historic lows — not to mention government incentives like tax credits that benefit home buyers.
May 9th, 2009 at 7:00 pm
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May 11th, 2009 at 2:22 pm
[…] Mortgage Lenders Tighten Standards Even as Demand Increases Mortgage lenders are tightening their standards for those looking to buy a home. Demand for traditional home mortgage loans is increasing, but lenders aren’t always lending. Indeed, many mortgage lenders are tightening their standards further, concerned that they will end up with more defaults on their hands. MarketWatch reports on the concerns had by lenders […] […]