Lenders, however, also will have some good reasons to grant mortgages outside of the Qualified Mortgage rule.
Let’s say a client has plenty of money in the bank and a sterling credit score. But the buyer is at a 55 percent debt-to-income ratio because he is self-employed with an irregular paycheck, or she is a savvy investor with a shifting income.
If you’re that client, Walters said, “I’m happy to make that loan to you. You’re never going to come back and sue me.”
But, he said, “I will not likely make a loan that doesn’t adhere to the (Qualified Mortgage rule) for people who have a modest down payment, have not a lot of assets, have a higher debt-to-income or maybe a middling-to-poor credit score.”
At least in the beginning, Lazerson said, lenders are likely to be overly cautious. “They’re going to err on the side of denying loans,” he said.
The Rates: While mortgages may be harder to get for some, they’re expected to cost more for everyone.
The National Association of REALTORS® predicts the 30-year fixed mortgage rate — at an average of 4.22 percent last week — will reach about 5.3 percent by the end of 2014. The Mortgage Bankers Association has said rates likely will increase above 5 percent in 2014 and then rise to 5.5 percent by the end of 2015.
What happens with interest rates, and how soon, hinges on the Federal Reserve’s bond-buying program. The Fed, which buys $85 billion of mortgage-backed securities and Treasuries each month, is expected to increase rates after paring down the monetary stimulus.
But Janet Yellen, nominated to be the next chairman of the Federal Reserve, recently said that the employment picture and the economy must improve before the Fed cuts back on the program.
Earlier this month, a Bloomberg News survey of 32 economists indicated that the Fed may begin to slow its bond-buying purchases in March.
