BACK TO BASICS: Mortgage Rules Change on Deck
Published On: March 2, 2026 Posted by: Jeremy Peterson
Since the Great Financial Crisis of 2008, stringent mortgage rules have kept banks in their lanes and kept the mortgage lending business rather sleepy. Exotic loans disappeared and banks were left with few options but bread and butter loans that they could issue to homebuyers.
This humdrum lending landscape has also had the undesirable effect of limiting the the number of borrowers who could qualify for loans. While there is a strong argument that the qualifications for a loan should be stringent, other factors have distorted the market in a way that has shut the door closed.
For instance, the risk appetite for banks has been so limited that fixer-upper homes have been exiled to their own wholesale marketplace dominated by cash buyers and flippers. Also, the red tape that needs to be jumped through to secure a home loan can lead to long processing times and added costs. Banks don’t like these regulations as much their borrowers don’t like them. But their hands have been tied.
That is, until recently. Plans have been in the works (esoterically called BASEL III Endgame) to modify bank regulations and return to some (not all!) lending practices that existed prior to 2008. One such change will allow banks to assign more risk to loans based on their loan-to-value ratio. This seems like common sense, but the byzantine nature of current regulations are not always in alignment with that.
New rules should be announced this month. This is something that should open more doors for buyers and create opportunities for those in the market.
