Opportunity is on the horizon if you are looking for a home loan in 2016. Lenders are reporting that credit standards are loosening up which will bode well for the housing market.
According to a Fannie Mae survey of senior executives, lenders who are expected to ease these standards for government-backed loans rose to about 16%.
“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.
This good news comes with some obstacles however, as Duncan points out that the housing market must improve in 2016, including the availability of starter homes for first-time homebuyers. Also, with the recreate increase in rates (link) will have an effect on competition between lenders, who will ease safeguards set out by the Federal Government.
Some other good news is the fact that Fannie Mae has recently announced that it will begin using trended data while looking at mortgage applicants, which follows a new credit scoring model aimed to look at credit history from a much different and favorable perspective. While using trended data, super-prime risk consumers that will have greater access to new loans by almost 9%.
“We are a long way from returning to pre-recession levels in terms of mortgage accounts, but changing consumer preferences for housing also may play a role in this slow recovery,” said Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit. “If the economy continues to perform well, we believe the net number of mortgages will increase over the next year.”
According to recent surveys done by the National Association of Realtors and Berkshire Hathaway HomeServices, close to 67% of homeowners and potential buyers often consider today’s mortgages rates to be average or high, which in fact, are record lows for the industry.0