The contract interest rate on the popular 30-year fixed rate mortgage with a conforming loan balance ($417,000 or less) increased to 3.87 percent from 3.86 percent. Jumbo loans ($417 or higher loan balance) with the same term increased to 3.84 percent from 3.81 percent.
Tight credit continues to hold back the mortgage purchase business. Speaking at FSR's Housing Policy Council forum on Tuesday, Peter Carroll of Quicken Loans said the problem stems from regulations around income and appraisals. Income for borrowers who are self-employed or make much of their salary in bonuses are difficult to document. The home appraisal process is also tripping up borrowers without a lot of money for a down payment.
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"We are seeing a chronic tightening of appraised values that very frequently come in below the sales price and when you are talking about consumers with lower down-payment loans, that's going to pull a lot of people out of eligibility with these products," said Carroll.
Regulators have taken steps to expand credit availability, putting in place low down payment loan option for Fannie Mae and Freddie Mac backed loans, decreasing fees for FHA loans, and working on a new credit score models to help more borrowers qualify for home loans.