Interest rates for mortgages have hovered at or below 5 percent for several months now, but many consumers have not been able to take advantage of the low rates, according to a report from the Wall Street Journal. This is because many lenders, still stinging from the losses of the recession, have kept their elevated standards even as the economy has improved, preventing about half of all Americans from obtaining the best interest rates available.
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“Since 2009, credit has become a lot tighter,” Greg Reiter of RBS Global Banking and Markets told the newspaper.
Typically, lenders require borrowers to have credit scores of 750 or better to receive the most favorable interest rates, and since the recession hit in late 2008, a vast majority of those loans have only gone to a small percentage of the population, the report said. Currently, 79.1 percent of all Fannie Mae-backed home loans with the best interest rates go to consumers who have credit scores of 750 or more. That number was just 32.5 percent in 2008.
Many consumers have interest rates for their home loans that are far higher than the current lows offered by lenders, but the prospect of refinancing can prove to be a daunting one for those who are not prepared.
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