Mortgage Guidelines Becoming Buyer Friendly At Country’s Biggest Banks

Mortgage Guidelines Becoming Buyer Friendly At Country’s Biggest Banks

Fed Senior Loan Officer Survey Q1 2011Another quarter, another sign that mortgage lending may be easing nationwide. The Federal Reserve’s quarterly survey of senior loan officers revealed that an overwhelmingly majority of U.S. banks have stopped tightening mortgage requirements for “prime borrowers”.

Let’s Define a Prime Borrower

A prime borrower is one with a well-documented credit history, high credit scores (according to Fannie Mae Loan Level Pricing Adjustments 740+), and a low debt-to-income ratio.

Of the 53 responding “big banks”, 49 reported that mortgage guidelines were “basically unchanged” last quarter. Of the remaining four banks, two said mortgage guidelines had “eased somewhat”, and the remaining banks said guidelines “tightened somewhat”.

It’s the second straight quarter in which fewer than 5 percent of banks tightened guidelines, and the first quarter in nearly 5 years in which the number of banks that loosened guidelines equaled the number of banks tightening them.

The easing in mortgage lending is a positive development for the housing market; and for buyers in Dublin and across the whole Bay Area. Looser lending standards means that more buyers will be approved for home loans, and that should spur home sales forward across the region.

Qualifying for a Home Loan

However, don’t confuse “looser standards” with “irresponsible standards”. It’s much more difficult to get financing today as compared to 2006. Delinquencies and defaults have altered how a bank reviews a loan application.

Today, underwriters are more conservative with respect to household income, total assets and overall credit scores. Even as compared to just 6 months ago:

  • Minimum credit score requirements are higher
  • Downpayment/equity requirements are larger
  • Maximum allowable debt-to-income ratios are lower

If you can get approved, though, your reward is that mortgage rates are especially low. Since early-April, both conforming and FHA mortgage rates have been on a downward trajectory, and pricing is near a 6-month low.

Home affordability is at an all-time high, too.

Start your application today!

Looser guidelines and lower rates should help fuel home demand through the summer months. If you’re in the market to buy, your timing appears to be excellent. I love to work with my readers and help you accomplish your goals. I work at Vintage Mortgage Group in Pleasanton a local trusted Mortgage Company situated to match you with the best loan program. Message me below today to get started!

 

 

Subscribe to our daily mortgage market emails.

Have a Question?

Legal Disclaimer
Or give us a call
925-484-5363