Nearly a third of Americans probably can’t qualify for a mortgage and less than half can qualify for the best rates, even with a large down payment, according to a new report from real estate website Zillow.com.
The site analyzed more than 25,000 loan quotes and purchase requests on Zillow in September and found that most borrowers with credit scores of 620 or less (29.3 percent of Americans) received no loan quotes. Those with credit scores above 720 (47 percent of Americans), though, got an average rate of 4.3 percent for conventional 30-year fixed mortgages.
While the easy availability of loans regardless of credit scores helped fuel the housing bubble, the tightening of regulations now could be slowing the recovery, said Zillow Chief Economist Stan Humphries.
“Today’s tighter credit is a predictable response by banks after the foreclosure crisis, but also keeps a cap on housing demand, which is important for the greater housing market recovery,” he said.