Stringent mortgage standards have kept many potential homebuyers on the sidelines the last few years.
But eight percent of banks say they’ve loosened up their mortgage standards in the past three months, according to the Federal Reserve’s latest Senior Loan Officer Survey. The survey shows that credit conditions have either held steady or loosened for eight of the past nine quarters.
Banks also reported they may be more open to increasing their mortgage business soon. Twenty-seven percent of the banks surveyed say they plan to shore up their residential mortgage assets within the next year, according to the survey.
Nearly 40 percent of banks also reported they’ve seen a rise in mortgage demand in the last three months.
Ellie Mae recently reported that 60 percent of home purchase applications in March were approved-up from 55 percent year-over-year.
Still, despite progress, mortgage conditions remain tight and applicants must still meet high standards-such as 20 percent down payment or high credit score requirements.
“Fear that Fannie Mae and Freddie Mac will force lenders to take back risky mortgages continues to be the primary condition constraining lending,” RealtyTrac reported. “Other conditions that have lenders holding tight to mortgage purse strings include obtaining insurance, slow economic growth, concerns about securitization, and processing capacity.”