Getting a Mortgage Likely Won’t Get Any Easier Soon

Credit standards for getting a loan are tight and likely won’t ease up in the new year, The Wall Street Journal reports.

“Lenders are still scrutinizing property appraisals, reams of income and bank statements, and anything else that could be used to force them to buy back the loan should it default, which means that it is much harder to get a loan than at any time since the 1990s,” The Wall Street Journal reports. “Buyers shouldn’t expect that getting a loan will get easier anytime soon, even though rates probably can’t get much more attractive.”

Banks are staying busy with a flood of refinancing from low rates in recent months, and they’re unlikely to ease their standards when they still have plenty of business coming their way, analysts say.

Also, the mortgage lending industry faces plenty of challenges that have contributed to constraining credit. For example, several larger banks are buying fewer mortgages from smaller lenders, which have tightened credit in some aspects, the Journal reports.

Bigger lenders also have been tightening up after a rise in legal expenses and costs, as well as new rules that are forcing them to keep more reserves.

“Banks also aren’t eager to invest in building capacity because origination volumes are likely to fall whenever mortgage rates rise from their current levels, which are the lowest on record,” according to The Wall Street Journal.