Will Bank Turmoil Create Mortgage Challenge?
Buyers may need to shop around for a mortgage. If clients pulled money from a regional bank or deposits went down, the bank may make it harder to qualify.
NEW YORK – Banking center unrest could make it more difficult for some consumers to get a mortgage loan or a loan for other big-ticket items.
Real estate agents report increased hesitancy among buyers, even compared with recent months when mortgage rates hit record highs. Before the recent banking tumult, consumers were under pressure after borrowing costs rose dramatically over the past year as the Federal Reserve lifted rates.
But to the extent banks are “having difficulty getting deposits, they’re going to have to cut back on lending, which they’ve already started to do,” says Jack Ablin, a founding partner of wealth-management company Cresset Wealth Advisors LLC. “Someone who wants to refinance a mortgage or buy a boat or fund a kitchen remodel – they’re going to have a more difficult time.”
It isn’t only the credit crunch that could cause consumers to delay big purchases, says Steven Blitz, chief U.S. economist at TS Lombard. It’s also a loss of confidence and a reluctance to take a financial leap when the landing spot is a moving target.
Consumers uncertain about their personal finances or the broader state of the economy might reconsider a major financial decision, and whether waiting might be the more prudent move at the moment.
Blitz says more consumers are asking, “Am I going to go now and take out a first mortgage and buy a house?”
Source: Wall Street Journal (03/21/23) Rubin, Gabriel
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