New Regulations May Tighten Lending Standards
The subprime mortgage crisis and subsequent recession led to stricter lending criteria for consumers. Although banks and lenders have been encouraging more Americans to apply for lines of credit, new banking regulations approved by the financial community may make it even more difficult to secure financing in the future.
U.S. banks have adopted new measures that are expected to be phased in by the year 2019. The initiatives will set guidelines mandating the amount and type of capital, assets and equity banks hold. The regulations are aimed at providing more protection to financial institutions in the event of another economic collapse. However, in order to meet their goals, institutions are expected to reduce the amount of assets they hold by imposing tighter consumer lending criteria, MarketWatch reports.
Although the move is expected to come about slowly, consumers may find it more difficult to secure financing for mortgages and auto loans in the future. Bank fees and interest rates are also expected to rise slightly, MarketWatch says.
Currently, few Americans have been able to seek debt relief through mortgage refinancing and personal loans due to low credit scores, unemployment and low income. As a result, more individuals have turned to credit counseling to improve their financial situation.