In the second quarter of 2023, US banks had a major shift in their lending standards for mortgages and home equity lines of credit (HELOC). This shift was due to the failure of regional banks and an increase in interest rates.
The tightening of lending standards has become a trend in the mortgage industry. Banks reduced their exposure to riskier loan products during the quarter, including loosening loan approval criteria and reducing loan-to-value (LTV) ratios. In addition, banks increased their scrutiny of loan applicants by looking more closely at their credit histories and debt-to-income (DTI) ratios. In response, customers who previously had no issue being approved for a loan had to provide additional documentation to secure financing.
• Banks tightened their lending standards for mortgages and HELOCs
• Reduced exposure to riskier loan products
• Loosened loan approval criteria
• Lowered loan-to-value (LTV) ratios
• Examined credit histories and debt-to-income (DTI) ratios
• Customers had to provide additional documentation to secure financing
You can read this full article at: https://www.housingwire.com/articles/banks-report-tighter-lending-standards-weaker-demand-for-mortgages-and-helocs/(subscription required)
Note Servicing Center provides professional, fully compliant loan servicing for private mortgage investors so they can avoid the aggravation of servicing their own loans and just relax and get paid. Contact us today for more information.