Home mortgage lenders easing up on home loans

The new year may bring new opportunities for consumers hoping to get a home mortgage.

More lenders are reporting easing credit standards, according to Fannie Mae, and expect standards to ease rather than tighten in the near future. This could help affordability in the housing market, which has been suffering under both tight credit and tight supply of homes for sale.

The share of lenders who expect to ease standards for government-backed loans rose to 16 percent, and the share expecting to tighten fell to 2 percent, according to a Fannie Mae survey. This is across all types of loan products.

A total of 213 senior executives completed the survey from Nov. 4 to 13, representing 194 lending institutions.

"These current practices and expectations toward easing among lenders compares to a historically relatively tight mortgage credit standard base," said Doug Duncan, senior vice president and chief economist of Fannie Mae. 

 

 

 

Duncan, however, points to several challenges to improvement in the housing market in 2016, affordability for first-time buyers topping the list. There are still very few starter homes on the market, and home price appreciation is lapping household income growth.

"Lenders' thoughtful easing of credit standards should help mitigate some of this affordability decline," he said.

The potential for rising interest rates, which would narrow the field of customers for loans, may increase competition among lenders and force them to ease some of the extra safeguards they added after being sued by the government for billions of dollars over bad loans dating back to the last housing boom.

 

 

Read full article here:  http://www.cnbc.com/2015/12/18/home-mortgage-lenders-easing-up-on-home-loans.html