With home prices continuing to tumble, it is getting more difficult for consumers to have their mortgage application approved, according to MSNBC.
New home sales in 2011 reached their lowest levels in the nearly 50 years the government has kept the statistic and much of it could be because residential mortgage lenders have been much more picky about deciding who will get a loan, the news source said. Consumers are typically fighting over a smaller pool of money to receive from lenders, as well. This is because of a large amount of new mortgage originations made during the housing boom. Now, nine in 10 residential mortgages are backed by the federal government.
Consumers also need to have high credit scores to qualify for loans, according to the source. One measurement showed that the average FICO score was 730, and this is a nearly 200-point jump from the average credit score for subprime loans during the housing boom.
While there is a lack of volume in lending at the moment, this may be improving as home prices are projected to climb in 2012. This information could make lenders more confident in awarding mortgages.