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JPMorgan Chase to raise mortgage borrowing standards

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Moderator

JPMorgan Chase to raise mortgage borrowing standards

  • From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.
  • The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market,

https://www.cnbc.com/2020/04/11/jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-out...

Message 1 of 23
22 REPLIES 22
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Super Contributor

Re: JPMorgan Chase to raise mortgage borrowing standards

Thank you for sharing the information.

Message 2 of 23
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Moderator

Re: JPMorgan Chase to raise mortgage borrowing standards

Fairly harsh especially the 20% down.. Doesnt appear chase wants to do many mortgages.  As with 20% down they greatly mitigate their potential losses if they got to foreclosure on the property..  It is a win win for them if they have to foreclose.

Message 3 of 23
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Senior Contributor

Re: JPMorgan Chase to raise mortgage borrowing standards

Well, I think alot has to do with interest rates are so low, artificially low in my opinion because of the temporary economic situation. According to Bankrate a 30 year fixed mortgage is 3.7%. That's around the rate my grandpa paid - in the 1950s! I sure wouldn't be in any rush to loan someone a couple hundred thousand for 3.7% for 30 years.


Message 4 of 23
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Frequent Contributor

Re: JPMorgan Chase to raise mortgage borrowing standards


@gdale6 wrote:
  • From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.
  • The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market,

https://www.cnbc.com/2020/04/11/jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-out...


Standards are still too low IMO. 

 

700 credit score isn't that great, and 20% down should be standard practice. 

 

I wouldn't lend $200,000 to someone with a 645 credit score and $5,000 down on the loan. 

Message 5 of 23
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Moderator

Re: JPMorgan Chase to raise mortgage borrowing standards


@VPExecutive wrote:

@gdale6 wrote:
  • From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.
  • The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market,

https://www.cnbc.com/2020/04/11/jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-out...


Standards are still too low IMO. 

 

700 credit score isn't that great, and 20% down should be standard practice. 

 

I wouldn't lend $200,000 to someone with a 645 credit score and $5,000 down on the loan. 


JPM target audience are people > 700 scores and high incomes so 20% down for whom they want isnt a stretch... 

 

Now regarding 645 scores and 5k down that is a risk/reward thing as an investor can make great returns or well not so great returns, but can always take the property...Less risks with secured loans alough only 5% down risk and housing market certainly can go down 5-20% fairly easily depending on how long this downturn lasts..

Message 6 of 23
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Moderator Emeritus

Re: JPMorgan Chase to raise mortgage borrowing standards


@CreditCuriosity wrote:

Fairly harsh especially the 20% down.. Doesnt appear chase wants to do many mortgages.  As with 20% down they greatly mitigate their potential losses if they got to foreclosure on the property..  It is a win win for them if they have to foreclose.


Chase and the rest of the large banks never really wanted to do conventional or FHA loans anyway TBH: can see that in their rate sheet compared to the warehouse lines they underwrite for a slew of the mortgage bankers which are offering competitive rates.

 

I like Chase, but even with my CPC discount they were nowhere close on the Houston mortgage.  That's a pretty clear indication they didn't want it.

 

That said, if I go with the plan I'm really starting to think about which is sell my LA condo and buy my dad's old place, assuming he fixes it up first (not guarunteed) it'd be a jumbo mortgage and there, I know without a doubt Chase is competitive rate wise and I'll probably do it with them.  Might put their new underwriting standards to the test Smiley Happy.

 




        
Message 7 of 23
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Moderator Emeritus

Re: JPMorgan Chase to raise mortgage borrowing standards


@VPExecutive wrote:

@gdale6 wrote:
  • From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.
  • The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market,

https://www.cnbc.com/2020/04/11/jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-out...


Standards are still too low IMO. 

 

700 credit score isn't that great, and 20% down should be standard practice. 

 

I wouldn't lend $200,000 to someone with a 645 credit score and $5,000 down on the loan. 


Conventional loan that gets dumped on Fannie / Freddie anyway?  Sure you would Smiley Happy.




        
Message 8 of 23
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Moderator Emeritus

Re: JPMorgan Chase to raise mortgage borrowing standards


@DaveInAZ wrote:

Well, I think alot has to do with interest rates are so low, artificially low in my opinion because of the temporary economic situation. According to Bankrate a 30 year fixed mortgage is 3.7%. That's around the rate my grandpa paid - in the 1950s! I sure wouldn't be in any rush to loan someone a couple hundred thousand for 3.7% for 30 years.


Bankrate's rates lag and take into account lenders that really shouldn't be considered if one is chasing aggressive rates.

 

Market is around 3.25% at par right now, might have ticked up a little bit but I doubt it.  My own, assuming it ever F'n closes, is at 3.125% in Houston.




        
Message 9 of 23
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Valued Contributor

Re: JPMorgan Chase to raise mortgage borrowing standards

This type of restriction doesn't bother me in the least (and as pointed out, should have been the standard all along); hopefully now that they're shifting harder away from risky loans, they'll respond with more favorable rates for those who do go with mortgages from them.

 

My advisor had just reached out to me to renew our Chase mortgage prequalification, which we will do if they can come in competitive on interest rates.

Message 10 of 23
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