When Mortgage Refis Weaken, Lower Lending Standards

Worst of All Worlds’ for Lenders
Mortgage Lending is down more than 50% at the big banks from the 1st to 4th quarter. Higher interest rates on mortgages is leading to less refinances and fewer home purchases.

...Banks are hungry enough for mortgage revenue that they may relax standards and increase lending for home-purchase loans. Indeed, a recent Federal Reserve report on bank loan officers signaled that some are easing mortgage standards.
The end of a credit expansion ends with tighter standards, not looser ones. There hasn't been a real private credit expansion yet in the economy, 5 years into a "recovery." Most likely it means it isn't coming (because this is a depression), but if private credit did begin growing again, it could fuel several more years of "recovery" before the bubble burst.

No comments:

Post a Comment