Consumer Financing Bank StudyYou'll need excellent credit and a considerable down payment to take advantage of lower home prices. And, if you already have a house equity credit line, do not be shocked to find that your equity isn't really exactly what it used to be, and your existing line of home equity credit may be diminished.
The Federal Reserve's second quarter lending institutions study measures the present financial conditions for domestic and consumer lending.
Residential mortgages and home equity loans:
More than 20% of the study participants stated they tightened up standards for prime mortgages.
More than 46% said they tightened credit requirements for non-traditional home mortgages.
No data are offered concerning accessibility of the riskier sub-prime mortgages because less than 3 of the participants now provide them.
More than 35% of lending institutions stated they made it harder for property owners to take advantage of their equity; more than 35% said they decreased the limit on existing house equity credit lines.
Consumer loans or credit cards:
10% of the lenders reported they were less willing to make consumer installment loans.
Approximately 35% stated they raised their requirements for approved loans.
More than 50% tightened conditions on brand-new and existing charge card.
Practically 50% said they reduced limitations of EXISTING charge card account limits.
Predicting the future
Now you understand just how much consumer and domestic financing has altered in the past couple of months, however what about the future? The Federal Reserve survey asked lending institutions to forecast the future for domestic and consumer financing.
Prime mortgages or home equity credit limit:
Just 2% expected to make money any easier to come by for house owners-- or potential property owners-- this year.
6% said they 'd most likely be more happy to lend beginning in the very first half of 2010.
Of those who forecast simpler days for real estate borrowers, 27% planning to the 2nd half of 2010 for the change.
12% predicted loan to stream more freely in 2011.
40% said they do not expect to loosen their hold on property loaning anytime in the foreseeable future.
Credit cards and consumer loans:
Only 3% stated they 'd be more generous with charge card loans this year.
Roughly 10% said their banks would be most likely to enable credit card loans early next year.
Nearly 13% stated credit card loans would be much easier to obtain during the second half of 2010.
Nearly 30% anticipated they 'd loosen up on charge card loans in 2011.
More than 30% stated their banks' tight standards would stay the exact same for the foreseeable future.
Other consumer loans:
2% said they 'd be more amenable to approving consumer loans later this year.
Just over 6% stated consumer loans would be simpler to acquire in website the very first half of 2010.
23% anticipated their banks would be more likely to authorize consumer loans in the second half of 2010.
19% said there would be no easing of consumer loan requirements up until 2011.
25% said their banks' lending requirements would remain tight for the foreseeable future.
What does all this mean for customers? If you already have a mortgage or house equity loan, count yourself lucky, even if the terms or limits on your equity loan modification; others who were relying on their house equity for things like a kid's college education might not be as lucky.
If you have actually been thinking of securing a loan to fund a vehicle, purchase brand-new furniture or take a trip, prepare for an uphill battle, or postpone your plans until a minimum of the end of 2011.
If you currently have charge card debt, you may have already seen increases in interest and reduces in limits. If so, it might be time to find an unsecured loan with better terms prior to your credit card financial obligation buries you.