JPMorgan Chase Raised Its Standards For New Mortgage Borrowers
United States’ largest bank JPMorgan Chase has just raised its standards relating to disbursing mortgage loans as part of the bank’s tackling procedure against the diminishing financial stability among the borrowers due to coronavirus disaster.
As part of the said change, the potential borrowers will need to fulfill additional conditions to successfully get a home loan and these conditions include having at least 700 at the credit score and down payment requirement of 20% of the home’s current value. The average down payment requirement in the housing market is around 10% as per the MBA.
As per a recent disclosure, over 16 million people have already claimed to be jobless after the coronavirus lockdown came into the picture and widespread recession has hit the economy as per many experts and economists. This change can also be viewed as the first move made by the banking structure by acknowledging the current scenario and taking steps to ensure fund safety.
“Due to the economic uncertainty, we are making temporary changes that will allow us to more closely focus on serving our existing customers,” JPMorgan Chase’s Chief Marketing Officer for mortgage lending business Amy Bonitatibus said to Reuters.
The bank sees multiple positive outcomes that will follow from the change and they include reduction of the possibility of Non-Performing Assets due to a large number of people who will not be able to repay their mortgage payments due to unemployment and it reduces the pressure on the staff that has been working from home as the demand for refinancing was surging before.
Talking about Refinancing, we would like to point out that as per the Mortgage Bankers Association (MBA), the requests for refinancing has seen the largest surge in more than a decade over the last month.
Bank also clarified that these changes will have no impact on the existing mortgage borrowers or to the moderate- and low-income borrowers. Before the current pandemic, the reality markets were quite steady in the united states, but it is believed that people may hesitate to add a mortgage to their debts during the current scenario of deep recession that may last for more than a year.