Are Some Borrowers “Self-Sidelining”?

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Posted To: MND NewsWire

CoreLogic has looked at an apparent contradiction in purchase loan originations that has emerged since the housing bubble burst. Why, CoreLogic economist Archana Pradhan asks in an article in the company’s Market Trends blog, if credit standards have tightened do we also see a drop in loan denial rates? Single-family purchase loan applications numbered 4.6 million in 2014. While this is up from the 3.6 million that set a decade-long low in 2011, it is down 60 percent from the 11.7 million applications submitted in 2005. Similarly, there were 7.4 million single-family purchase loans originated in 2005 and that dropped to 3.2 million by 2014. The denial rate for purchase applications, peaked at 18.7 percent in 2007 but was at 13.2 percent in 2014. If credit standards are relatively tight today…(read more)

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