The Federal Financial Institutions Examination Council released their Home Mortgage Disclosure Act data from 2010 last week. Despite low rates last year, lending is down, and plenty of people are being denied on their mortgage applications.

The Federal Reserve released a report, titled The Mortgage Market in 2010: Highlights from the Data Reported under the Home Mortgage Disclosure Act, that summarizes data from HMDA, a 1975 law that requires financial institutions that issue home loans to report their annual activity to the government.

The law was made to ensure that lenders are not discriminatory in their practices, and it also provides an interesting window into lending activity, year over year.

Photograph: ohneski / PHOTOCASE source

Last year, there were 12.95 million applications for home loans, including new purchases, refinance loans, and home improvement loans. That may sound like a lot, but it’s actually declined 9% from 2009’s numbers, and it’s less than half the number of home loan applications from 2006: 27.5 million.

The most active month last year, June, saw 326,000 home loans extended. In June of 2006, also that year’s most active month, that number was 712,000.

More than 2.5 million loan applications were denied in 2010, almost a quarter of all applications. Almost 600,000 of these denials were for new home purchases. The denial rate for applications to purchase a manufactured home was a staggering 54.9%. The denial rate for conventional home purchase loans on site-built homes was significantly lower, about 15%. Refinance denials ranged from 21% to 33% for site-built housing.

So, consumers trying to take advantage of the historically low mortgage rates are having a tough time getting access to credit. And even those who do walk away at times. The Fed report notes that 5% of applications in 2010 were approved, but the applicants walked away from the loans.

Both lenders and consumers are uncertain about the future, it seems. Lenders have tightened up their standards, and fewer Americans are applying for loans. So in spite of the fact that mortgage rates have never been this low — ever! — buying a home is has never been more unappealing, or difficult.


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