Graph via Businessweek.com
In response to ultra-tight lending standards of the past few years, Federal Reserve officials said this week they would consider loosening criteria needed to extend mortgage credit. The issue is slated for discussion at this week's upcoming Fed meeting, and approval is also expected from the U.S. Securities and Exchange Commission and other financial regulators.
Relaxing of lending rules would be welcome news to anyone who has struggled to get a green light for new mortgage loans or refinancing since the industry was upended after the 2008-09 crash.
Following the collapse of the mortgage-backed securities market at the start of the recession, largely due to loose criteria for handing out mortgages, regulators swung to the other side of the pendulum to allow only borrowers with very high credit scores and comfortable income and assets to get new loans.
In the meantime, interest rates dipped below 4 percent (on average) this week for the first time since June 2013, opening the door for a large chunk of borrowers to refinance to a lower rate or purchase new homes at a more affordable rate. Anything could happen after the next week's economic and political news, however, causing rates to ricochet upwards just as fast, so be sure to take advantage of this opportunity if you may benefit by calling a licensed loan advisor at 877-939-0339.
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