JPMorgan Chase to Raise Mortgage Standards Amid Weakest Economic Outlook

JPMorgan: Emerging Markets’ Outlook Better Than Developed

JPMorgan Chase to Raise Mortgage Standards Amid Weakest Economic Outlook

Jp morgan chase & Co, America’s largest lending institution by asset size, raises borrowing standards for most new home loans this week as the bank moves to reduce credit risk associated with the coronavirus epidemic..

As of Tuesday, clients applying for a new mortgage will need a credit score of at least 700 and will be required to pay an initial payment equal to 20% of the value of the home.

The changes highlight how banks are quickly shifting to respond to a bleak outlook for the U.S. economy and stress in the housing market after coronavirus containment measures plunged the country into recession and left 16 million people unemployed..

«Due to economic uncertainty, we are making temporary changes that will allow us to focus more closely on serving our existing customers.», – told Reuters Amy Bonitatibus, Marketing Director, Home Loan Company JPMorgan Chase.

The bank was the fourth largest U.S. mortgage lender in 2019, according to industry publication Inside Mortgage Finance.

JPMorgan Chase to Raise Mortgage Standards Amid Weakest Economic Outlook

The changes should help JPMorgan reduce the risks associated with borrowers who unexpectedly lose their jobs, part of their wages, or whose houses have fallen in value. The bank said the change would also free up staff to handle a spike in mortgage refinancing requests, which is taking longer due to staff working from home..

Refinancing requests jumped to their highest level in a decade last month, according to the Mortgage Bankers Association (MBA), as average rates on 30-year fixed-rate mortgages, the most popular mortgage, fell to near-record lows..

JPMorgan Chase to Raise Mortgage Standards Amid Weakest Economic Outlook

JPMorgan will not disclose the current minimum requirements for its various mortgage products, but the average down payment for the housing market is around 10%, according to the data. MBA.

New lending standards do not apply to JPMorgan’s roughly four million existing mortgage clients or low- and middle-income borrowers who are eligible for its product «DreaMaker», which requires a minimum down payment of 3% and 620 credit points.

The US housing market was stable earlier this year, but with a deepening downturn and potential home buyers unable to view property or shop due to social distancing measures, the health crisis now threatens to disrupt mortgages. sector.

The residential mortgage market is already under stress after requests from borrowers to defer mortgage payments surged 1,900% in the second half of March, Reuters reported..

The National Association of Realtors said last month that short-term home sales could fall about 10% from historical sales this time of year. A consumer survey conducted by the Fed in March showed that house prices are expected to rise 1.32% over the course of the year, the lowest since the polls began in 2013..

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