Purchase loan applications fall, but looser underwriting could bode well for the future

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Applications for purchase loans last week decreased a seasonally adjusted 4 percent from one week earlier, and were down 37 percent on an annual basis, the Mortgage Bankers Association reports. The week-over-week decrease included an adjustment for the Thanksgiving holiday.

Purchase loan applications posted an overall gain in November, a “step in the right direction” that will likely precede further modest increases over the next year, Capital Economics said in a report.

The economic research firm said that easing credit standards is one force that will help bolster mortgage applications in the months ahead. According to Capital Economics, the Federal Reserve Board’s Senior Loan Officer Survey found that a net balance of 9 percent of lenders loosened mortgage availability in the fourth quarter. Meanwhile, Ellie Mae reported that the successful mortgage applicant in October had a FICO score of 732, down from 750 a year ago.

Source: Mortgage Bankers Association.