It’s no secret millions of millennials and Gen Xers are having trouble buying homes. But here’s some good news on that front: It just a got a little easier for these and other buyers to qualify for so-called prime mortgages, loans that go to the highest quality borrowers.
A decade after the housing market collapse, some would-be homeowners are still locked out of the housing market despite mortgage rates that remain near record lows. But banks, which got burned by bad loans a decade ago, are finally starting to loosen underwriting standards, according to real estate website The Mortgage Reports.
Based on recent Federal Reserve data, about 18% of banks loosened mortgage loan standards last quarter, while just 3% tightened them, wrote The Mortgage Reports. More banks have loosened standards than tightened them for seven straight quarters. In addition, roughly 7 out of 10 mortgage applications led to closings last quarter, the most on record, according to statistics compiled by software company Ellie Mae.
Prime mortgages require borrowers to have a credit score of at least 740 and meet other financial requirements, including making a substantial down payment.