JPMorgan Chase will raise its borrowing standards for the majority of new home loans amid economic fallout from the coronavirus pandemic.
The bank, the nation’s largest lender by assets and fourth-largest mortgage lender in 2019, will require any new mortgage applicants to make a down payment of 20 percent and have a credit score of at least 700 beginning Tuesday, Reuters reported. The bank would not disclose its current minimum requirements but current average down payments are approximately 10 percent.
“Due to the economic uncertainty, we are making temporary changes that will allow us to more closely focus on serving our existing customers,” Amy Bonitatibus, chief marketing officer for JPMorgan Chase’s home lending business, told Reuters.
With the change, the bank will reduce its exposure to customers who suddenly lose a job or experience a pay cut, as well as those who see their homes lose value, and the bank added that it will give staff more freedom to address an increase in borrowers seeking to refinance their mortgages while staff are working from home.
Refinancing requests reached a more than 10-year high over the past month. Average rates on the most commonly-purchased mortgage, the 30-year fixed-rate mortgage, hit record lows during the same period.
The bank’s existing customers will not be affected by the new rules, nor will customers who qualify for its low-income services that require an at least 3 percent down payment and a 620 credit score, according to Reuters.