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Incomes of prospective purchasers have increased since 2004, but the loan-to-income ratio has declined. (AP Photo)

The screw tightens: Home loans tougher to get

BY Tom Kelly  on December 4, 2012 @ 9:11 am (Updated: 3:25 pm - 12/4/12 )

Recently released government data for 2011 from the Home Mortgage Disclosure Act (HMDA) showed just how tight mortgage credit has been.

Incomes of prospective purchasers have increased since 2004, but the loan-to-income ratio has declined.

The median household income for a homebuyer using conventional financing rose from $79,000 in 2007 to $ 90,000 by 2011, while the national median household income has remained flat since 2007 at about $50,000.

This indicates that either (1) more loan applicants with higher incomes were applying and those with lower incomes were self-selecting themselves out of the process, and/or (2) that lender income standards had become more stringent.

The new data revealed that as median home buyer income rose, credit financing became even tighter.

If financial institutions returned to normal underwriting requirements, National Association of Realtors estimates that an additional 10 to 15 percent residential homes would be sold, resulting in the creation of approximately 300,000 new jobs.

NAR members have cited local and regional banks as well as credit unions as good places to look for a mortgage.

Tom Kelly, Real Estate Today
Tom Kelly has been a professional journalist for 36 years. He served The Seattle Times for 20 years, many as Real Estate Editor.
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Comments (2)


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  • HPD 5-0 wrote...
    They are "harder" because the banks etc are only lending to RESPONSIBLE PEOPLE!!!!
    December 4, 2012 4:34 pm
    Owning a home is not a "right".
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  • Whidbeyboy wrote...
    Doubtful
    December 5, 2012 8:59 am
    I doubt that is the only issue and has not been an issue since the bubble burst. I am responsible , have equity in my home, make 6 figures and been in business for 12 years in the same town, but could not get a home equity loan (3.25% sounded good to consolidate some of my debts at a lower interest) My house did drop in price though. They say my house is worth $40,000. Now I have 5 acres and that has stayed the same, and I really laugh at the $40,000 (tax assessed) since it is not a trailer I live in but a nice cottage style house. My taxes have gone up though even since my house supposedly drop $30,000 in price. It's a joke. The banks were bailed out, but when it comes to helping us out, they seem clam up. Nice.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • { "Thumbs Up":"1","Thumbs Down":"-1" }