Over 25% of Mortgages Denied in 2010
According to a recent Wall St Journal article, “Tighter Lending Crimps Housing,” over 25% of all mortgages nationwide were rejected last year by the ten largest real estate loan providers. And, this is before new rules take effect that will make it even more difficult to borrow. (See my previous post, “Getting Mortgage Will Be Even Tougher“)
For many years, lenders gave loans to anyone who had a pulse. Now, they are denying mortgages for both purchases and refinances even when there is a very large down payment or significant equity in the property. This bi-polar behavior is consistent with my experience of working with large lending institutions over the years.
Although the Federal Reserve appears to be leaning toward keeping interest rates artificially low (past their stated end-of-June deadline), the time is fast approaching when our government can no longer print money to stimulate the economy. Is it rational to expect mortgages to become easier to get once that happens?