US banks are reporting that they are easing up on requirements for some types of credit. It couldn’t come at a better time for many investors.
It may be Getting Easier to Borrow Again
According to coverage by the NY Post and data being reported by banks to the Federal Reserve, financial institutions are again easing up access to various forms of credit.
27% of banks say they are making it easier to qualify to get credit cards.17% of banks say they are making it easier to get car loans.
According to the Wall Street Journal some banks also say they are making it easier to get mortgage loans again. Borrowers should still expect rigorous underwriting for most new home purchase loans though.
Why are Lenders Loosening up Now?
Lenders cracked down and tightened up after news of the pandemic and lockdowns broke. Some went right back to their 2008 playbook and cut off credit lines and restricted access to credit to only those with the best credit scores.
Just over a year later it turns out many have been paying off their credit cards again, and the financial apocalypse everyone expected hasn’t hit. At least not yet. So banks may also have more reserves than needed.
These companies need to grow, drive sales and win customers back.
What it Means
More access to capital and credit is good for helping to extend the current run in the real estate market.
Of course, many of these big banks have once again burned their relationships with once loyal customers and lost their trust. The banks only want to be there for the good times, when they profit from lending. When things get tough and people want to get credit, they get turned away.
We’ve also seen banks hiking their service fees, reduce credit limits, and poorly managing mortgage forbearance programs. Others have proven to be great financial partners through the more uncertain times and are likely to have boosted their customer loyalty.
For investors, easier access to capital can be coming at a great time to leverage and scale volume and real estate portfolios while the market is booming and interest rates are cheap.
For mortgage note investors and landlords it means that renters and borrowers have more options, and more appealing options for keeping up with payments in a crunch, as well as refinancing debt.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund