More evidence that lenders are relaxing standards to compete for homebuyers

The share of mortgages processed by Fannie Mae and Freddie Mac that are purchase loans has skyrocketed since the spring of 2013, and may well account for more than half of all loans the government-sponsored enterprises (GSEs) securitize by the end of the year, Inside Mortgage Finance reports.

Purchase loans accounted for 42 percent of loans securitized by the GSEs in September, up from just 16 percent in March, Inside Mortgage Finance says.

In order to make up for diminishing refinance volume, some lenders may be loosening their grip on credit, according to IMF — a conclusion that’s backed by the latest monthly survey by mortgage origination software company Ellie Mae Inc.

Ellie Mae found average FICO scores for closed loans dropped from 747 in January to 732 in September, and that purchase mortgages accounted for 58 percent of closed loans, up from 27 percent in January.

Source: Inside Mortgage Finance