Risky lending increases

Category: Home Equity Loans Published: Tuesday, 23 February 2016 Written by Super User

Subprime lending, one of the prime causes of the housing crash, is on the rise, according to new data from the credit-reporting service Equifax.

The company's National Consumer Credit Trends Report found that mortgages for homebuyers with less than a 620 credit score rose steadily from January through October of last year. More than 312,000 such subprime loans were originated during the nine months, 28 percent more than a year earlier.

Equifax also reported a rise in subprime lending for home-equity loans. Subprime borrowers took out $1.4 billion in new home-equity debt during the first nine months of last year, up 32.7 percent from the previous year.

While there are many characteristics that define a subprime loan, such as the specific terms of the loan and the lender who issues it, credit standards are becoming more accommodating to meet market demand, said Amy Crews Cutts, chief economist at Equifax.

At the same time, lenders are focusing more attention on evaluating consumers ability to repay."

-- Jim Weiker

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