Credit standards for mortgages appear to be easing just a bit, according to an analytical study and reports from front-line lenders.|
The average borrower credit score for a closed loan dropped from 749 in January to 745 in February, Ellie Mae Inc., a provider of software to home lenders, reported Friday. Though still steep, it was the lowest average score since last May, said Jonathan Corr, Ellie Mae's chief executive.
The average down payment for a home purchase was exactly 20 percent, the report said — the first time it's been that low since July.
And the percentage of total income that borrowers were being allowed to devote to debt payments averaged 35 percent — the highest since June, Corr said, "suggesting that the credit box may be expanding."
In the meantime, the mix of purchase versus refinance mortgages shifted toward the former, reflecting improved buyer confidence and a recent increase in mortgage rates, which dampens demand for refinances. In February, 32 percent of all closed loans were for purchases, compared with 27 percent in January.
In another sign of easing mortgage standards, a few banks are now providing home-equity lines of credit for as much as 90 percent of the home value, up from 80 percent, said Mark Cohen, a Beverly Hills, Calif., mortgage banker.
That means that someone owing $350,000 on a $500,000 house might get a $100,000 credit line instead of one for $50,000 — assuming they have a minimum credit score of 720 and can fully document their ability to make payments.
Cohen said he's also seen a slight loosening of borrower worthiness gauges such as the debt-to-income ratio. "There's a slight credit easing, but in a subtle way," he said.
For people with less than 20 percent down payments, mortgage insurance is now easier to get, said Jeff Lazerson, a Laguna Niguel, Calif., mortgage broker.
And "delayed" financing, unavailable in recent years, is back, Lazerson said — someone who paid cash for a one- to four-unit property may be able to get back up to 75 percent of their money by taking out a loan right away, instead of having to wait for six months.
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