Indianapolis Area Real Estate Blog

Mortgage Approvals Are Getting More And More Scarce

Mortgage Guidelines TightenThe economy's improving but lending standards are not. Nationally, banks are making mortgage approvals harder to come by. Underwriting guidelines are tightening. The data comes from the Federal Reserve's quarterly survey to its member banks. 

The Fed asks senior bank loan officers around the country to report on 'prime' residential mortgage guidelines over the most recent 3 months and whether they've tightened. For the period October-December 2009:  

  • Roughly 1 in 4 banks said guidelines tightened
  • Roughly 3 in 4 banks said guidelines were 'basically unchanged'

Just 2 of 53 banks said its guidelines had loosened. Combine the Fed's survey with recent underwriting updates from  and generally tougher standards for conventional loans and it's clear that lenders are much more cautious about their loans than they were, say, in 2007. Today's Indianapolis home buyers and would-be refinancers face a bevy of new borrowing hurdles including:

  • Higher minimum FICO scores
  • Larger downpayment requirements for purchases
  • Larger equity positions for refinances
  • Lower debt-to-income ratios

So, if you're on the fence about whether now is a good time to buy a home, or make that refi, consider acting sooner rather than later.  It doesn't necessarily matter that mortgage rates are low, or that there's an up-to-$8,000 home purchase tax credit for households that qualify.  With each passing quarter, fewer and fewer applicants are eligible to take advantage.

Post a Comment

Blog Archives

Posts By Category

All Categories Buyer Resources (59) Community News (37) Home and Family (36) Home Maintenance Tips (14) Homeowners (34) Homes for Sale | Listings (25) Indianapolis Things to Do (62) Indy Photo Spot (5) Lifestyle Communities (4) Local Indy (42) Market Statistics (87) Mortgage News and Info (49) Parks and Recreation (12) Random Thoughts (19) Real Estate News (73) Real Estate Terms (15) Relocation Tips (8) Seller Information (41) Upcoming Events (3)

Posts By Month

Blog Roll

Homes in Hendricks County
Grab Our RSS Feed
New Listing Alerts

Be one of the first to know when new listings matching your criteria hit the market.

Get New Listings
Relocation Guide

Find your next home and learn about neighborhoods, current market statistics, and local schools.

Free Relocation Guide
Free Market Analysis

Our free service provides you with a detailed estimate of your home's current market value.

Get a Free Market Analysis