All of Sovereign Lending Group’s clients know that rates have moved higher. Much higher. Average 30-year fixed-rates are firmly around the 7.5 percent mark (up 3.88% on a year-to-year basis and the high 2 percent range from a few years ago). And Sovereign’s clients know that home prices are still relatively high compared to historic norms. The combination of the two impacts affordability, and the demand for new mortgages is waning.

Some potential house buyers and borrowers have stopped either looking to buy a home or looking at options to finance their home. Less competition is good news for buyers who figured they didn’t have the requisite credit score or down payment to for a mortgage. Sovereign can help! Surprisingly, while the overall criteria haven’t changed, the ability to get approved has become somewhat easier in recent years. Mortgage applicants with modest credit scores are in a better position to compete in this market because there are fewer buyers and there is more room for negotiation.

A study sheds more light on what real estate experts call an expanding U.S. consumer mortgage market. TransUnion’s “Where Will Growth in Mortgage Originations Come From” report, found that “despite an overall decrease in the number of consumers actively seeking a mortgage, some consumer segments remain positioned as potential opportunities for lenders.” Sovereign’s loan officers have some great programs for low-income Americans, renters, first-time homebuyers, self-employed Americans, and U.S. veterans to increase their ability to finance a home.

Yes, applications are down but there are a number of sizeable consumer segments with purchase origination potential for mortgage lenders to work out a deal with eager homebuyers. That’s the case even in a period of high inflation and higher interest rates.

Some lenders and investors may be shifting their guidelines within the ATR (ability to repay) requirements. The current economic conditions could encourage stretching underwriting guidelines depending on a lender’s risk tolerance, or down payments, income, or credit scores. But Sovereign Lending Group’s management is a firm believer in borrowers having the ability to repay the loan.

Sovereign also offers DPAs (down payment assistance) programs, or putting clients into credit coaching programs to boost scores. Our loan officers will take the time to assist buyers with working through underwriting conditions and help them through the pre-approval process. We’re there for you!