Are Mortgages Becoming Easier to Obtain?
Other smaller lenders have also cut some of their requirements recently too. For example, the U.S. unit of Toronto-Dominion Bank has lowered down payments to 3 percent without, in some cases, borrowers having to pay mortgage insurance, Bloomberg News reports.
Following the housing crisis, banks tightened up credit standards. The Urban Institute estimates that up to 1.2 million loans were prevented from being made in 2012 due to the tightening of credit. Lenders mostly concentrated on the refinancing business, but as rates have risen in the past year, refinancing has fallen drastically. Lenders are now looking to the purchase market to ramp up their business.
Credit standards are at the loosest point in at least two years, according to the Mortgage Bankers Association index, reflecting March data.
What’s more, Morgan Stanley data shows that nearly 16 percent of the mortgages for home purchases in March were issued to borrowers who had monthly debt obligations exceeding 43 percent of their pay—up from 13.4 percent in mid-2012.