The mortgage industry has seen a variety of changes in the past few years. From easy to acquire loans to few loans made at all, currently there seems to be a more even balance in the mortgage industry. However, in the area of home equity loans, there seems to be a trend that may make home equity lines of credit more difficult to obtain. According to a new study completed by the federal Office of the Comptroller of Currency, home equity credit is fast becoming the most difficult type of loan to acquire.
A survey completed annually showed that out of 86 of the nation’s biggest banks and federal savings branches, at least one in five of them have increased their standards for home equity while at the same time loosening requirements for other types of loans. Home equity loans that included high loan to value ratios were some of the biggest changes seen. Almost half of the lenders surveyed reported that they have increased their standards for lending in the past year. Not a single bank or lending institution reported loosening these types of loan requirements. Even amidst the value of homes continuing to rise, the tightening of home equity has increased to the point that twenty two percent of lenders have reported increasing their standards for home equity lending which is an increase from levels of 14 percent from the year prior.
However, on the mortgage home front there continues to be positive news for buyers. Amongst lenders, only thirteen percent reported tightening their standards for residential mortgage lending, but just minimally. In contrast, eleven percent of lenders reported easing standards for residential lending. Almost three-fourths of the industry remained the same as the year prior. News for those seeking a new home mortgage is encouraging while those seeking a home equity line of credit may face a tougher time.