The new standards will make it so customers applying for a new mortgage will need a credit score of 700 or higher and will have to make a down payment of 20 percent of the home’s values. JPMorgan didn’t release its current rates, but the average down payment according to the Mortgage Bankers Association (MBA) is around 10 percent.
The new standards only apply to new applicants, not those who currently have a mortgage through the bank. The standards also won’t apply to lower-income applicants who are using the DreaMaker project, which only requires a credit score of 620 and a 3 percent down payment.
The changes will hopefully reduce the number of people who can apply for a mortgage and then lose their job amid the uncertainty of the coronavirus pandemic. And, with staff working from home and dealing with an influx of refinancing requests, things will hopefully also be streamlined a bit for the bank.
JPMorgan has been keeping watch on the crisis with the rest of the world and recently predicted more dire failings than it had previously estimated.
According to data from the MBA, refinancing requests spiked to their highest numbers in years last month as average rates on 30-year, fixed-rate mortgages fell to historic lows. That represents the most popular mortgage type.
The coronavirus has flipped the table on what was, until earlier this year, a stable housing market. Since the virus’s advent in the latter half of March, the number of borrower requests to delay mortgage payments spiked by 1,900 percent.
According to the National Association of Realtors, home sales could fall by around 10 percent because of the pandemic. Prospective home buyers haven’t been able to look at any new properties because of concerns around the highly infectious virus, and the economy’s persisting degradation won’t do it any favors, either.
A Federal Reserve March consumer survey had the prospective growth at only 1.32 percent this year, the lowest number since 2013 when the survey began.