Higher mortgage interest rates over the past couple of months may have discouraged some home buyers from seeking a mortgage loan, but that doesn't mean lenders are just going to stand by make less money.
Credit availability in the United States rose 2 percent in July, and it is up 3 percent from May, when interest rates began climbing, according to a recent survey by the Mortgage Bankers Association.
Total U.S. mortgage applications declined 47 percent last week from a year ago, and refinances, which had made up the bulk of mortgage lending during the housing crash, are down 59 percent from a year ago. Applications to purchase a home are up just 5 percent.
After years of easy money that led to the housing crash and financial crisis, lenders dramatically tightened credit standards over about the past six years. Average borrower credit scores on new loans are significantly higher today than before 2007, and some lenders require larger down payments; however, Massachusetts first-time home buyers have low-down-payment options.
Even the Federal Housing Authority, the U.S. government mortgage insurer that was created to help borrowers with lower credit scores, has raised its credit standards, as well as its insurance premiums.
The following is a short CNBC video about lenders easing credit standards.