Mortgage lenders are adjusting to market conditions and loosening their standards for loan applicants in order to attract more business, according to new data provided by Charlotte-based LendingTree.
The lender said that down payment amounts for a 30-year mortgage rate averaged 15.78 percent of the loan amount for the first three months of the year, down from 16.01 percent in the last quarter of 2014. For the same period, average credit scores for borrowers were 6 percent lower than the previous quarter, suggesting that lenders are more willing to consider borrowers with less-than-stellar credit scores.
As refinance activity has declined and federal laws went into effect in January making borrowing more difficult, lenders appear to be adjusting their guidelines in order to allow more borrowers to qualify for loans.
“Relaxed lending guidelines translates to a larger pool of qualified homebuyers that could boost the housing recovery,” said Doug Lebda, Lending Tree founder and chief executive officer.
Lebda said that lenders across the country have started to accept lower down payments and credit scores, but the banks still require proof that borrowers have the ability to repay the loan. LendingTree, the online marketplace that matches consumers with lenders, found that down-payment requirements and averages varied depending by state.
The states with the lowest down payment averages:
- North Dakota at 12.31 percent
- Nebraska at 12.50 percent
- West Virginia at 12.50 percent
- Missouri at 12.89 percent
- Alabama at 12.89 percent
States with the highest down payment averages include:
- New Jersey at 19.36 percent
- New York at 18.54 percent
- California at 18.21 percent
- Connecticut at 18.01 percent
- Hawaii at 17.89 percent