Lending Landscape - November 8, 2007

The lending landscape was relatively unchanged this week from a rate perspective, but banks surveyed admitted standards have tightened, even for borrowers that are considered good risks.

Rates moved up one basis point across the board, but activity on Wall Street today leads me to believe the downward trend is continuing. The benchmark 10 year bond yield closed at 4.29 today, a number not seen since last year.

Mortgage applications are cyclical on a monthly basis and true to form they slowed this week. CNNMoney reports -

Refinance volume declined 3.2 percent during the week, while purchase applications fell 0.05 percent. Refinance applications accounted for 49.1 percent of total mortgage applications during the week.

Concerning interest rates -

The average interest rate for a traditional, 30-year fixed-rate mortgage increased to 6.16 percent during the week ending Nov. 2, from 6.15 percent the prior week.

The average interest rate for one-year adjustable-rate mortgages increased to 5.94 percent from 5.93 percent a week earlier.

Mortgage loans are still available for borrowers with good credit and a downpayment. Subprime lending is requiring higher credit scores or a larger down payment and higher interest rates. The rate difference between a prime borrower and a subprime borrower has increased to nearly a four percent difference based on examining certain lenders.

It has been a particularly bad week for Wall Street with higher oil prices and a declining real estate market driving fears. For buyers, a favorable rate environment and builders willing to deal make now an attractive time to buy.