Man… finally! Florida temps here in Winter Haven have started to feel well… more like Florida! I welcome the “thaw.” And, speaking of warming up… we just might be seeing a bit of a thaw in our previously rock solid frozen credit market!
In fact, if the unfreezing of credit is paramount to an economic rebound, the first signs of a thaw may be here.
Monday, Uncle Ben and company released their quarterly survey of 84 member banks. In it, we find that fewer than half of the banks surveyed reported tightened “prime” mortgage guidelines over the last 3 months.
This is GREAT NEWS for active home buyers here in Winter Haven in need of a new home loan or those looking to refinance.
Of course, the term “prime” is a vague term with respect to home loans, but it typically refers to mortgage applicants who can document:
- Equity or downpayment in a home
- Credit scores over 740
- Excessive income versus debt (resulting in a low Debt to Income Ratio – or DTI)
In looking at the Fed’s survey, we can infer that because less than 50% of banks made credit less available, more than 50% maintained or increased the number of home loan approvals.
So… while borrowing may not have necessarily become easier for prime borrowers, it appear that it hasn’t become harder, either. Hey… as far as I’m concerned – we can “score one” for the housing market!
Home Loan Guidelines Still Restrictive
All of this said, over the 12-month period beginning late-2007, we witnessed banks denying more and more home loan applicants with low credit scores, low downpayments, and high debt-to-income levels.
In addition, Fannie Mae added new fees based on specific loan traits, and second mortgages all but disappeared from the marketplace.
The cumulative outcome of these actions precludes many Americans from participating in the current Refi Boom. However, if the trend reported by the Fed continues, lending may open up a little bit as the year progresses, providing a boost to housing and to the economy.
Many experts believe that the tightening of credit helped create this recession. Perhaps the loosening of credit will be the way out.
Related articles
- Fannie Mae Relaxes Standards For Refinancing [Refinancing] (consumerist.com)
- Mortgage applications rise (money.cnn.com)
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage loan originator, I’m your guy. Call me at 888-859-7418 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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