Mortgages Are Harder to Obtain in U.S. Even as Home-Loan Rates Get Cheaper

[marmar]

Mortgage Seekers Find Rates Are Down, Credit Standards Tighter

By Sharon L. Lynch

Sept. 16 (Bloomberg) -- U.S. mortgage rates are dropping. Good luck getting a loan.

Existing home prices have fallen 7.7 percent since their July 2006 high and rates dropped below 6 percent last week for the first time in more than three months. The obstacle for people ready to buy is finding a willing lender, said Suzanne Bach, senior vice president of New York-based Guardhill Financial Corp., and an 18-year home lending veteran.

``Nobody really wants to take risk anymore,'' Bach said in an interview. ``Deals are getting really hard to do now.''

Lenders including Bank of America Corp. and JPMorgan Chase & Co. keep requiring higher credit scores, bigger cash down payments, and more income than was needed to buy a home during the five-year housing boom. Astoria Federal Savings, a Lake Success, New York-based lender that holds mortgages on its books rather than selling them to investors, has even started discounting annual employee bonuses in calculating income.

About 75 percent of U.S. banks tightened standards on mortgage lending to the most credit-worthy borrowers in the three months ended in July, according to the Federal Reserve's quarterly Senior Loan Officer Survey released Aug. 11.

The average U.S. 30-year fixed-rate mortgage was 5.78 percent yesterday, down from 6.08 percent the week before, according to Bankrate.com. The Fed is scheduled to meet Tuesday and may lower its key rate to 1.75 percent from 2 percent which may reduce mortgage rates further.

Lehman Brothers Holdings Inc., the biggest underwriter of mortgage-backed securities, filed for bankruptcy yesterday, part of the credit crisis which has cost financial firms more than $511 billion in mortgage-related writedowns and credit losses. .....(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601213&sid=aKXk3JIj24sg&refer=home

[bemildred]

1. So now I won't get half-a-dozen offers to do a ReFi every week?

I guess that is one silver lining. Think how many trees are being saved by this "downturn".

[TornadoTN]

2. No kidding - we re-financed our home for a better fixed rate recently

We bought our home four years ago and refinanced two years ago to take advantage of an even lower fixed rate. I'm not kidding when I say we got calls from the same mortgage company wanting us to refinance (again) just two weeks after we closed the refi! This went on for a few months until I finally got in touch with someone that could put a stop to it. It's annoying and an ominous sign - they are desperate for money for one and makes you wonder how many people actually fall for it.

[yellowdogintexas]

3. yeah I haven't been getting very many of those for quite some time. I had not

really thought about it until I saw your post. Still getting a shitload of credit card offers, which I gleefully shred. We have a VA fixed loan and about the only refi offer we have received in months is one targeted to holders of VA loans. I don't know if we would refi or not at this point, not to take equity but to get a lower fixed rate and reduce our monthly payment.

If all the credit card offers and mortgage refi offers were made out of a durable material, I could put a new roof on my house and tile my bathrooms.