The housing market in 2021 was one for the record books. With prices at historic highs and the number of listings in a deep hole, open houses looked like Black Friday sales and many would-be buyers were elbowed out of the melee.
In 2021, the share of buyers paying all cash for home purchases trended higher in the United States, but the overwhelming majority of home sales still involved mortgages. Unfortunately, as with every year, many 2021 mortgage applications were met with denials. Demand for homes has been high for the past few years, and this competition and high prices mean that some potential buyers can’t be successful. As the size of the average mortgage balloons by 15%, for instance, people already stretching their homebuying budget can’t keep up.
Approved, denied: Have outcomes changed? In 2021, lenders processed some 7.1 million mortgage applications, up 8% or about a half million from the year before. Among those, 73% resulted in loan originations and 7% resulted in denials. The remainder were closed for incompleteness or approved but not originated.
Tap to View Advice for buyers: Buyers faced with denials for debt-to-income ratio or credit history have their marching orders: When lending standards are high, entering the market with less debt and a robust credit history increases your chances for approval. A denial based on collateral isn’t quite as straightforward, but there are options.
Loan types signal steep competition While the number of new mortgages rose by 9% overall in 2021, that bump conceals some interesting changes across loan types.
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Source: MarketWatch - 🏆 3. / 97 Read more »