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Mortgage credit standards remained largely unchanged over the past three months as demand weakened overall, according to a report from the Federal Reserve. The Fed's Senior Loan Officer Opinion Survey, which covers a three-month period ending in October, shows credit standards on prime mortgages remained basically steady at 83 percent of reporting banks over the last few months. The numbers were largely the same for subprime and non-traditional mortgages.
On net, demand for all mortgage types weakened, though changes were mixed in each category. For prime loans, 19.4 percent reported moderately stronger demand, while 20.8 percent saw demand weaken moderately. Notably, the majority of banks experiencing increased demand for mortgages were smaller institutions, leaving larger banks fighting over a smaller share of business.
In an annual survey of homebuyers and sellers, the National Association of Realtors found that only about 33 percent of home purchases in the last year were made by first-time buyers, down from 38 percent in last year's survey and the long-term average of 40 percent. The association's chief economist, Lawrence Yun, pointed to many of the frequently cited reasons why young Americans are staying on the sidelines, including increasing living costs and high debts. Tight credit conditions have also been a challenge, with nearly half of recent first-time buyers saying the mortgage application and approval process was more difficult than expected.
