Demand for Mortgage Loans Increases
Demand for Mortgage Loans Increases
According to a survey conducted by the Federal Reserve this summer, approximately three out of five U.S. banks said that the demand for mortgage loans is increasing as the housing market becomes stable and mortgage rates decline to record lows.
However, even though there is an increase in mortgage demand, lenders are still strict when it comes to mortgage borrowers and small business loans as well.
The report discovered a large increase in demand from borrowers. 57 percent of banks reported an increase in demand for home-purchase loans during the last three months, which is up from 38 percent during quarter one.
Peter Newland, economist at Barclays Capital, said that the increase in loan demand proves the housing sector is gradually recovering.
In addition, the report discovered that the credit standards of banks are still tough for mortgage borrowers or small businesses. In fact, 93 percent of the loan officers surveyed said that standards for approving mortgages to borrowers with good credit were the same with the previous quarter, and 95 percent said that standards were the same for firms with lower than $50 million annual sales.
Moreover, it was stated in the report that loan terms improved for medium and large companies, commercial real estate deals, auto loans and credit cards.
According to Millan Mulraine, analyst at TD Securities, the improving credit conditions is one of the signs that the economy is recovering.
The respondents of the Fed survey included 64 domestic lenders and 23 U.S. branches of foreign banks from July 3 to July 17.
Based on the survey, banks have been careful in terms of applying the Home Affordable Refinance Program, which is an effort by the Obama administration to encourage refinancing. However, the majority of banks have restricted their participation to loan they already hold. Most banks said that they were getting more refinancing applications than they could handle.
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Filed under: mortgage • mortgage loans • mortgage loans for people with bad credit • Mortgage Refinance
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