It is getting hard to get a mortgage, and that is weighing down the US economy.
That is according to a Deutsche Bank note out Tuesday.
“Mortgage standards tightened modestly in 1H15 … off what we would consider already tight levels,” the note said.
“And we expect additional tightening following recent guidelines from the Federal Housing Administration.”
“We continue to believe that consumer lending standards remain tight overall — particularly in mortgage (67% of all consumer debt). We believe this has been (and will remain) a drag on economic growth in the US and contribute to lower for longer interest rates,” analysts wrote.
Average FICO scores for Fannie Mae and Freddie Mac mortgages rose from 720 in the pre-crisis era to 750 in the first half of 2015, according to Deustche Bank analysts, who described those scores as “very high … at the end of prime nearing super prime.”
The average FICO score for Federal Housing Associations loans in the second quarter was 689, up from 682 in 2014.
That suggests that mortgage brokers and banks are placing restrictions on their loan packages that are significantly stricter than federal guidelines.