Mortgage lending in the US declined last year amid weak demand and stricter credit standards, which are especially evident in areas with high real estate foreclosures, said the Federal Reserve.
Its yearly analysis of mortgage data gathered from 7,900 financial establishments revealed that lenders issued 7.9 million mortgages in 2010, 12 percent lower than in 2009 but higher than the 10-year low of 7.2 million recorded in 2008.
The report revealed that the declines were more prominent in areas hit hardest by property devaluations and foreclosures. During the housing boom, most of these areas experienced high concentrations of exotic and subprime mortgages.
The report noted that these distressed areas have a rising population of lower-income borrowers as high-income borrowers accounted for only 29 percent of all loans last year from the 52 percent reported in 2005.
Moreover, the analysis also emphasised the difficulties that Americans are experiencing in refinancing their mortgages. A majority of homeowners failed to take advantage of ultra-low rates due to a lack of equity and stricter underwriting standards compared to when they first got their loans.
The report also cautioned that borrowing costs could accelerate and loans could dip in high-cost housing markets where limits for government-backed loans will be slashed by the end of September, unless Congress steps in.
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