Residential and consumer financing are tight as a tourniquet. You'll require exceptional credit and a considerable down payment to take advantage of lower home prices. Prepare for a rough trip if you already own a home and want to tap into the equity. And, if you already have a home equity line of credit, don't be amazed to discover that your equity isn't what it used to be, and your existing line of home equity credit may be reduced.
The Federal Reserve's 2nd quarter lenders study measures the present financial conditions for domestic and consumer financing.
Residential home loans and house equity loans:
More than 20% of the study participants stated they tightened standards for prime mortgages.
More than 46% said they tightened credit standards for non-traditional home loans.
No stats are offered regarding availability of the riskier sub-prime mortgages because fewer than 3 of the participants now use them.
More than 35% of loan providers said they made it harder for property owners to take advantage of their equity; more than 35% said they decreased the limit on existing home equity credit lines.
Consumer loans or charge card:
10% of the lending institutions reported they were less going to make consumer installment loans.
Approximately 35% stated they raised their requirements for approved loans.
More than 50% tightened terms and conditions on new and existing credit cards.
Almost 50% stated they reduced limitations of EXISTING charge card account limits.
Anticipating the future
Now you know just how much consumer and residential financing has changed in the past couple of months, however what about the future? The Federal Reserve survey asked lenders to predict the future for residential and consumer loaning.
Prime home mortgages or house equity line of credit:
Only 2% expected to make money any much easier to come by for house owners-- website or potential homeowners-- this year.
6% said they 'd probably be more happy to provide beginning in the first half of 2010.
Of those who predict simpler days genuine estate customers, 27% planning to the 2nd half of 2010 for the modification.
12% forecasted money to flow more freely in 2011.
40% stated they do not anticipate to loosen their hang on property lending 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 allow charge 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% forecasted they 'd chill out on credit card loans in 2011.
More than 30% said their banks' tight standards would stay the exact same for the foreseeable future.
Other consumer loans:
2% said they 'd be more open to giving consumer loans later this year.
Just over 6% said consumer loans would be simpler to get in the very first half of 2010.
23% forecasted their banks would be most likely to authorize consumer loans in the 2nd half of 2010.
19% said there would be no easing of consumer loan standards until 2011.
25% said their banks' lending standards would remain tight for the foreseeable future.
Exactly what does all this mean for customers? If you currently have a home mortgage or house equity loan, count yourself fortunate, even if the terms or limits on your equity loan change; others who were counting on their home equity for things like a child's college education might not be as fortunate.
If you've been considering securing a loan to fund a car, buy new furniture or take a holiday, get ready for an uphill struggle, or postpone your strategies until at least the end of 2011.
You might have currently seen boosts in interest and reduces in limitations if you currently have credit card financial obligation. It may be time to discover an unsecured loan with much better terms prior to your credit card financial obligation buries you if so.