JPMorgan Chase to raise mortgage borrowing standards

JPMorgan Chase & Co, the country's largest lender by assets, is raising borrowing standards this week for most new home loans as the bank moves to mitigate lending risk stemming from the novel coronavirus disruption.

From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home's value.

The change highlights how banks are quickly shifting gears to respond to the darkening US economic outlook and stress in the housing market, after measures to contain the virus put 16 million people out of work and plunged the country into recession.

"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.

The bank was the fourth largest US mortgage lender in 2019, according to industry publication Inside Mortgage Finance. The changes should help JPMorgan reduce its exposure to borrowers who unexpectedly lose their job, suffer a decline in wages, or whose homes lose value.

The bank said the change will also free up staff to handle a surge in mortgage refinance requests, which are taking longer to process due to staff working from home and non-essential businesses being closed.