Loan Demand Declines as Credit Standards Tighten in Q4 2022


By David Logan on February 10, 2023 • According to the Federal Reserve Board’s January 2023 Senior Loan Officer Opinion Survey (SLOOS)—conducted for bank lending activity over the fourth quarter of last year—banks reported weaker demand for residential real estate (RRE) loans, home equity lines of credit (HELOCs), and commercial real estate (CRE) loans. Additionally, credit standards tightened across all categories of mortgage loans. Residential real estate credit standards tightened across the board relative to the prior quarter. Mortgage lending standards tightened the most for non-QM jumbo, QM jumbo, and QM non-jumbo, non-GSE eligible RRE loans. In contrast, GSE-eligible loans saw only a small increase in the net percent of banks reporting tighter standards in Q1 2023 than Q4 2022. Banks also reported weaker demand across residential real estate loan categories. The vast majority of banks reported weaker demand than the prior quarter.  The net share of banks reporting weaker demand reached 93.0% while the share was at least 85% for other types of RRE loans. The net percentage was a record for every loan category dating back to the inception of the series in 2015. Lending standards for CRE loans broadly tightened as well.  The largest increases in tightening over the prior quarter were for loans secured by multifamily residential properties (+17 percentage points to 57%) and construction and land development loans (+12 ppts to 69%). Banks also reported that demand for CRE loans all decreased and declined by more than they had the prior quarter.   Related ‹ OMB Proposes Standards on Building Materials Made in AmericaTags: ADC, bank lending, commercial real estate loans, construction lending, housing finance, lending, lending standards, mortgage, QM, subprime

Loan Demand Declines as Credit Standards Tighten in Q4 20222023-02-10T14:18:59-06:00

Which Mortgage is Right for You?


When shopping for a mortgage loan, one size does not fit all. It’s important to understand your options and how they will affect your budget. Adjustable vs. Fixed One key decision is whether to select a fixed- or adjustable-rate loan. A fixed-rate mortgage keeps the same interest rate for the life of the loan; your monthly payments of principal and interest will not change. Because of this stability, fixed-rate mortgages can help you plan your finances far into the future. They also can be attractive when you’re able to lock in a low rate in a volatile market. An adjustable-rate mortgage typically offers an introductory period—for example, five years—with a rate lower than you could get with a fixed-rate loan. After this period, the rate adjusts annually based on the financial markets. Adjustable-rate mortgages can be a less expensive option if you don’t plan on living in a house for very long. You can also take advantage of falling rates without refinancing. Of course, if rates climb, you could owe more in later years. How Long? You may think that a 30-year mortgage is your only option, but 15-year mortgages are also available to many borrowers. The overall cost of a mortgage will be less over 15 years than 30 years—the shorter term means less total interest—but the monthly payments are higher. If you can afford to pay off the mortgage sooner, a 15-year loan might be a better choice. However, the lower monthly payments of a 30-year loan could let you use money to pursue other financial goals. Finding Your Loan These are just a few of the options available to finance your home purchase. The mortgage that’s right for one buyer might not be right for another. Be sure to talk to your lender about your life and plans to make sure you get the loan that is best for your situation.

Which Mortgage is Right for You?2021-07-20T01:17:36-05:00

Avoid These Mistakes Between Loan Approval and Closing


You’ve been careful with your finances, saved for a downpayment, and finally received approval for a mortgage loan. It’s time to celebrate, right? Not yet. Your lender will recheck your credit right before closing. Don’t give him or her reason to question your creditworthiness by making these mistakes: 1. Changing Jobs Changing employers could mean delays due to employment and salary verifications. Of course, you shouldn’t ignore a great career opportunity. It means only that optional moves should wait. 2. Making a Big Purchase Your debt-to-income ratio is an important factor when being considered for a loan. If you add to your debt by purchasing a car or boat, you risk exceeding the ratio that your lender finds acceptable.  3. Opening Credit Accounts You might apply for a credit card so you’re ready to buy furniture for your new house. But similar to taking on new debt, applying for a new credit account can harm your mortgage approval. The credit inquiry necessary for the new account will ding your credit score a few points, and the lender might wonder just how much you plan on spending with that new account. Part of the mortgage process is a final check to ensure you can afford the loan. Neither you nor the lender wants the payments to be a struggle, so don’t give the lender any reason to doubt your creditworthiness. There are other ways a transaction can fall apart before closing. Be sure to consult with your REALTOR® about contract deadlines and other to-do items to ensure you close on your new property.

Avoid These Mistakes Between Loan Approval and Closing2021-05-04T09:15:51-05:00

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