All opinions are those of Michael Haigh or the Guest Blogger featured.
They do not necessarily reflect the opinions of W.J. Bradley Mortgage Capital, LLC


Mortgage Approvals Are Getting More And More Scarce

Federal Reserve Quarterly Lending Survey 2007-2009

The economy’s improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by.

Underwriting guidelines are tightening.

The data comes from the Federal Reserve’s quarterly survey to its member banks.  The Fed asks senior bank loan officers around the country to report on “prime” residential mortgage guidelines over the most recent 3 months and whether they’ve tightened.

For the period October-December 2009:

  • Roughly 1 in 4 banks said guidelines tightened
  • Roughly 3 in 4 banks said guidelines were “basically unchanged”

Just 2 of 53 banks said its guidelines had loosened.

Combine the Fed’s survey with recent underwriting updates from the FHA and generally tougher standards for conventional loans and it’s clear that lenders are much more cautious about their loans than they were, say, in 2007.

Today’s home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

  • Higher minimum FICO scores
  • Larger downpayment requirements for purchases
  • Larger equity positions for refinances
  • Lower debt-to-income ratios

So, if you’re on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later.  It doesn’t necessarily matter that mortgage rates are low, or that there’s an up-to-$8,000 home purchase tax credit for households that qualify.  With each passing quarter, fewer and fewer applicants are eligible to take advantage.

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Related posts:

  1. Banks Raise Mortgage Qualification Standards
  2. How Improving Home Values May Lead To Easier Mortgage Approvals
  3. Mortgage Guidelines Starting To Loosen?

About Michael Haigh
Michael Haigh has 20+ years of professional experience in the banking and mortgage industry. He has the knowledge, education, and dedication to get you the best loan for your situation, answer your questions honestly and completely, and make your mortgaging experience a pleasure. His reputation includes being the number one lender in the country for CitiBank for 9 years, then at Chase for 1 year and now with WJ Bradley since August of 2009. This is because of the quantity of loans, myriad of people he's helped, and his dedication to helping his clients find the perfect loan for them.

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