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What’s Ahead For Mortgage Rates This Week – November 12th, 2019 Last week’s scheduled economic news included the Federal Reserve’s survey of loan officers and the University of Michigan’s report on consumer sentiment. Weekly readings on mortgage rates and new jobless claims were also released.

Fed Survey of Loan Officers Finds Banks Tightened Lending Standards

The Federal Reserve’s survey of financial institutions found that lenders tightened standards for credit card and other consumer loan approval. Lending officials said that concerns over the economy drove decisions to tighten standards for new credit cards, auto loans, and personal loans.

Lenders also tightened lending requirements for new borrowers in January and March. January’s revision to lending requirements was the strictest since 2009.

Lending officials surveyed said that less tolerance for risk and concerns over new borrowers’ ability to repay loans drove decisions to tighten loan approval requirements. Growing concerns over student loan debt may have influenced lenders’ reluctance to extend credit to new borrowers.

Survey respondents said that they did not tighten requirements for residential real estate loans, but did increase restrictions on commercial real estate loans. Survey participants included 76 domestic banks and 22 foreign banks and agents of federal banks.

Mortgage Rates, New Jobless Claims Fall

Freddie Mac reported lower average mortgage rates last week after the prior week’s spike. Rates for 30-year fixed-rate mortgages fell nine basis points and averaged 3.69 percent. Rates for 15-year fixed-rate mortgages fell six basis points to an average of 3.13 percent.

The average rate for 5/1 adjustable rate mortgages fell four basis points to 3.39 percent. Discount points averaged 0.50 percent for 30-year fixed-rate mortgages and 0.40 percent for 15-year fixed-rate mortgages. Discount points for 5/1 adjustable rate mortgages averaged 0.30 percent.

Initial jobless claims fell to a one-month low of 211,000 new claims filed; analysts said that last week’s reading approached a 50-year low and proved the staying power of the strongest job market in decades. In other news, the University of Michigan’s Consumer Sentiment Index rose to 95.70 in November as compared to October’s index reading of 95.50. Analysts expected consumer sentiment to fall to 95.00.

What’s Ahead

This week’s economic releases include reports on inflation and retail sales. Weekly readings on mortgage rates and initial jobless claims will also be released.

How Does My Existing Debt Affect Getting A New Mortgage Carrying debt is a common problem that people have. Some of the most common types of debt include student loans, credit cards, and motor vehicles. When you are interested in buying a new home, you often think about whether or not your debt is going to hurt your chances of qualifying for a new mortgage.

Fortunately, you may still get a new home with that debt. There are several factors that may determine whether or not you qualify.

Your Debt to Income Ratio

The debt to income ratio is a major factor that the mortgage lender is going to consider when deciding whether or not you will qualify for a new mortgage. In general, the magic number is 43 percent. If your debt exceeds 43 percent of your total income, the lender will have a hard time giving you that new mortgage.

For example, if you make $5,000 per month, you will want to have less than $2,150 in monthly debt payments. To make yourself a more attractive candidate for a mortgage, try paying off some of your existing debt.

Taking A Look At The Credit Score

The lender is also going to consider your credit score. The higher your credit score is, the more likely the lender will reward you with a loan. In order to keep your credit score high, make sure you manage your debt well.

Making your debt payments on time will keep your credit score high. Missing debt payments will lower your score. Manage your existing debt well and you will have a better chance of qualifying for a mortgage.

Making Sure You Can Handle A Mortgage

Finally, the lender is also going to take a look at whether you can take on the responsibilities of owning a home. The monthly mortgage payment isn’t the only expense you will be taking on. Some of the other issues you will have to handle include property taxes, maintenance costs, and homeowners’ insurance.

The bank or credit union will want to ensure you can handle these costs. To make these expenses easier to bear, it might be a good idea to pay off some of that existing debt.

Investing In A New Mortgage

Looking for a new home is exciting. You can purchase a house with existing debt as long as it is minimized and managed well. Think about these factors before investing in a mortgage.

If you are in the market for a new home or interested in listing your current property, be sure to consult with your trusted real estate professional.