Lenders tighten the purse strings
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Mortgage-lending standards, which continue to be recalibrated amid the credit crunch that began last summer, are getting tighter and tighter. And it’s not just a sub-prime issue.
More than half of the banks queried in a survey in January by the Federal Reserve said they had tightened standards for prime mortgages -- made to borrowers with strong credit -- compared with about 40% who were asked in October.
More than 70% of the banks said they expect the quality of residential mortgages to deteriorate in 2008.
In contrast with the whirlwind days of the housing boom (roughly 2001 through 2005), banks now want larger down payments and higher credit scores from their borrowers.
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