(MCT)—The housing market may be showing flickers of recovery, but don’t count on lenders to make it any easier for borrowers.
While banks are seeing stronger demand for home loans, they’re not loosening up their tight credit requirements, according to the Federal Reserve’s April survey of senior loan officers.
The survey, released Monday, found more than 90 percent of the bank respondents made basically no change in the past three months in their credit standards for prime home borrowers—those who have relatively high credit scores and well-documented financial statements. And for nontraditional residential loans, which include interest-only mortgages and “alt-A” products with limited income verification, credit standards tightened a bit since January.
The Fed’s quarterly survey, however, showed more banks eased standards for most other types of consumer loans. And demand for all types of consumer loans rose somewhat, the Fed said, with auto loans having the biggest increase.
To understand just how much times have changed from a few years ago, the Fed asked loan officers a series of questions about their likelihood of making home loans to certain borrowers today compared with 2006, at the height of the market.
About 60 percent of lenders said they were “much less likely” to approve a home loan for a borrower with a FICO score of 620 who made a down payment of 10 percent—a big change from the mood in 2006. Even for an applicant with a respectable credit score of 680 and a 10 percent down payment, 21 percent of lenders said they were much less likely to say yes today compared with 2006. And another 29 percent said they were “somewhat less likely” to approve that application.
©2012 Tribune Co.
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