The best debt consolidation loans right now

Best loans for debt consolidation 2x1

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

The best debt consolidation loans of 2021

Lender APR Amount available Learn more

wells fargo logo

5.74% to 24.24% $3,000 to $100,000 for unsecured loans, $3,000 to $250,000 for secured loans Personal Loan

Lighstream Logo

5.93% to 19.99% $5,000 to $100,000 (for excellent credit) Lightstream Debt Consolidation Loan

SoFi Logo

5.99% to 16.19% APR (with AutoPay) $5,000 to $100,000 SoFi personal loan
Payoff by Happy Money Logo
5.99% to 24.99%

$5,000 to $40,000

Payoff loan

Avant Logo

From 9.95% – 35.99% APR

$2,000 to $35,000 for unsecured loans; $5,000 to $25,000 for secured loans

Avant Personal Loans

Generally, you’ll need a personal loan for debt consolidation, which means replacing multiple loans with a single loan instead.

Most personal loan lenders ask about loan purpose when starting the loan application process, and often, personal loans for debt consolidation have higher interest rates than other personal loans and other loan types.

Table of Contents: Masthead Sticky

PFI Best Wells Fargo Logo Banner

Wells Fargo

Flexibility makes Personal Loan a top contender for best personal loans for debt consolidation. Wells Fargo separates debt consolidation loans from personal loans, but the interest rates are the same.

Benefits include incredibly competitive interest rates, ranging from 5.74% to 24.24% APR, and an autopay discount of 0.25% if payments are made from a Wells Fargo account. For unsecured personal loans, the most common type for debt consolidation, the amount available ranges from $3,000 to $100,000 and there are no origination or prepayment fees.

Wells Fargo gives several options for personal loans that aren’t common elsewhere. Firstly, there’s an option to secure your loan with a CD or savings account, though that option is only available to current customers. Secured loans allow you to borrow up to $250,000, though an origination fee of $75 applies to secured loans (unsecured loans don’t have a fee).

Wells Fargo can send your loan funds to your Wells Fargo bank account, or to a credit account outside of Wells Fargo to pay down your debts directly.

Watch out for: Secured loan options. Secured loans use collateral to bring down interest rates and increase the amount available to borrow. But using these savings accounts as collateral could mean losing your savings or CD if you don’t pay on your loan.

Additionally, it’s worth mentioning Wells Fargo’s history with data security and compliance. The bank has faced several federal penalties for improper customer referrals to lending and insurance products, and security issues tied to creating fake accounts several years ago.

Read Insider’s full review of Wells Fargo here.

Personal Loan

PFI Best lightstream Logo Banner

Lightstream

Lightstream Debt Consolidation Loan is a highly regarded lender for many loan types, and has been a top pick across Insider’s coverage of the best personal loans and best auto loans. However, this lender only works with borrowers with good or better credit, with a minimum credit score requirement of 660.

LightStream offers consistently competitive interest rates, though its minimum interest rate for debt consolidation is higher than its typical personal loan’s interest rates. However, this lender does not have any prepayment or origination fees. Same-day funding is available with LightStream.

Watch out for: Varying loan terms between LightStream’s typical personal loans and debt consolidation loans. Only borrowers with excellent credit can borrow the $100,000 maximum, and anyone without excellent credit may not qualify for the full amount.

LightStream defines excellent credit history as an account with five or more years of credit history, stable and sufficient income for debts, and a variety of credit history with little or no credit card debt. If you’re looking for a debt consolidation loan, chances are you have a significant amount of debt, and may not fit these qualifications.

Additionally, LightStream doesn’t have a way to pre-qualify online. You’ll have to apply for the loan to find out exactly what your rates and terms could look like, which could make comparison shopping difficult.

Read Insider’s full review of Lightstream here.

Lightstream Debt Consolidation Loan

PFI Best SoFi Logo Banner

SoFi

A SoFi Personal Loan is the best option for anyone with a high balance, as this lender makes debt consolidation loans of up to $100,000. Debt consolidation loans from this lender are comparable in rates to those offered by LightStream, but SoFi offers higher loan limits to all applicants, whereas LightStream only allows some borrowers to borrow up to $100,000. Similarly, SoFi doesn’t have any application, origination, or prepayment fees.

SoFi offers unique features like unemployment protection, which could put loans in forbearance for up to three months if you find yourself out of work.

Watch out for: Stringent requirements. SoFi personal loans have a minimum credit score of 680. According to NerdWallet, the average income among borrowers is over $100,000.

Read Insider’s full review of SoFi here.

SoFi personal loan

PFI Best Payoff Logo Banner

Payoff

In the fair credit range, it can be tough to qualify for a personal loan with reasonable interest rates – many lenders have a minimum of 660 or 680. However, a Payoff loan could be a good option for people with credit scores as low as 640. Interest rates are comparable to those offered by LightStream and SoFi, but this lender has less stringent requirements.

Compared with competitors Prosper and Best Egg, which both have the same 640 minimum credit score requirement, Payoff’s interest rates are capped lower, and could have lower origination fees.

Watch out for: Origination fees. Payoff offers loans with origination fees ranging from 0% to 5%. Competing lenders Prosper and Best Egg charge minimum 2.41% and 0.99% origination fees, respectively. The better deal will depend on your credit score, income, and repayment term.

Payoff loan

PFI Best Avant Logo Banner

Avant

With bad credit, a personal loan for debt consolidation can be expensive, or hard to qualify for. An Avant personal loan is the best bet for borrowers with poor credit, requiring a minimum credit score of 600.

Compared to other personal loan lenders offering debt consolidation loans for bad credit borrowers, Avant’s terms are the most generous. Interest rates range From 9.95% – 35.99% APR. While there is an administration fee, it could be lower than competitors’ fees with a cap at 4.75%. Avant also has the advantage of quick, next-day funding available.

Watch out for: Secured loan options. Like Wells Fargo, Avant offers the option to secure your loan with collateral like your car. While this could be helpful to lower interest rates, it could put your car in jeopardy if you don’t pay. Secured loans have an administration fee of 2.5%, and a maximum amount of $25,000.

Read Insider’s full review of Avant here.

Avant Personal Loans

Other personal loans we considered

  • LendingClub personal loans: This lender has the potential for high origination fees that could add to the cost of borrowing. The average origination fee is 5.2%. Read Insider’s full review here.
  • Prosper personal loans: Prosper’s minimum credit score requirement is 640, but borrowers with this score could get lower interest rates and potentially lower fees from Payoff. Read Insider’s full review here.
  • Best Egg personal loans: Like Prosper, borrowers with credit scores of 640 or above could get lower minimum interest rates and lower maximum fees from Payoff. In order to qualify for the lowest possible interest rates, borrowers need a minimum FICO score of 700 and an income of at least $100,000 per year. Only three-year and five-year loan terms are available, making these loans less flexible than other options. Read Insider’s full review here.
  • Discover personal loans: Discover’s personal loan rates start higher than other lenders’ loans, and borrowers who meet the minimum credit score requirements could get lower interest rates from LightStream, which cap lower. However, Discover makes payments directly to creditors, which could simplify your payoff process. Wells Fargo is the only other bank on our listing to offer that option.
  • Marcus by Goldman Sachs personal loans: Like Discover, borrowers who qualify for Marcus personal loans could find lower minimum interest rates with LightStream, SoFi, or Wells Fargo.
  • Axos personal loans: This lender’s personal loans require a minimum credit score of 720. For borrowers with this type of credit, lower interest rates can be found elsewhere.
  • OneMain Financial personal loans: OneMain doesn’t have a minimum credit score required to apply, which could make it a viable option for people who don’t meet Avant’s 600 minimum. But interest rates range from a high 18.00% – 35.99%. Read Insider’s full review here.

Which lender is the most trustworthy?

We’ve compared each institution’s Better Business Bureau score to give you another piece of information to choose your lender. The BBB measures businesses’ trustworthiness based on factors like their responsiveness to customer complaints, honesty in advertising, and transparency about business practices. Here is each company’s score:

Lender BBB Grade

wells fargo logo

NR

Lighstream Logo

A+

SoFi Logo

A+
Payoff by Happy Money Logo
A+

Avant Logo

A

With the exception of Wells Fargo, our top picks are rated A or higher by the BBB. Keep in mind that a high BBB score does not guarantee a positive relationship with a lender, and that you should continue to do research and talk to others who have used the company to get the most complete information possible.

The BBB currently does not have a rating for Wells Fargo as the BBB is investigating its profile. Previously, the organization gave Wells Fargo an F in trustworthiness. In the past few years:

If you’re uncomfortable with this history, you may want to use one of the other personal loan lenders on our list.

Frequently asked questions

Why trust our recommendations?

Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product, we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don’t have to.

How did we choose the best debt consolidation loans?

To find the best personal loans for debt consolidation, we combed through the fine print and terms of about a dozen personal loans to find the ones that were best suited to help with consolidating debt. We considered four main features:

  • APR range: For the most help with debt payoff, a personal loan for debt consolidation needs to have lower interest rates than the credit card or other debts you’re consolidating. We looked for the loans that had the lowest rates possible for each credit range and purpose. The average credit card interest rate was 16.28% in 2020, so we focused on loans that had the potential to beat this.
  • Appropriate loan amounts: We looked for personal loans that had the most variety in loan amounts. According to loan comparison site Credible, the median amount of debt consolidated in May 2020 was $18,000. To benefit the most borrowers, we included personal loans with maximum limits over $10,000.
  • Minimum credit score requirements: Where available, we considered the minimum credit score requirements for each company. We considered loans for excellent, fair, and poor credit, grouping loans into categories based on these credit score requirements.
  • Fees: We considered fees like origination or administrative fees in our decisions, looking for loans with the fewest or lowest fees. None of the best loans listed have prepayment penalties.
  • Nationwide availability: We only considered loans with availability in most or all 50 US states.

What is debt consolidation?

Debt consolidation takes all sorts of debts, including credit cards, medical debt, or typically any other type of unsecured debt, and rolls it into one loan.

To consolidate debt, you get a loan from one lender for the total amount of debt you’d like to combine. Then, you use those funds to pay off the individual, smaller debts. At the end, you have all of your debt rolled into one monthly payment, one deadline for debt repayment, and a smaller interest rate.

Can I use any personal loan for debt consolidation?

Most personal loans allow a variety of uses, and while most include credit card consolidation or debt consolidation, not all do. Make sure to read the fine print of any personal loan you’re applying for, and make sure that debt consolidation is an acceptable use of your loan. All of the loans we considered had an option to use the loan for debt consolidation, if not a separate loan, which we included details for.

Related Product Module: Related ProductRelated Content Module: More on Loans

Read the original article on Business Insider

America’s housing market is racist. Congress could easily help fix it if they wanted to.

A sign showing that a house has been sold.
  • Black borrowers are 80% more likely to be denied a mortgage than white borrowers.
  • The Fair Lending for All Act would establish a new federal office to ensure discrimination in lending is not happening.
  • The bill would help end discriminatory practices by clarifying that discrimination based on zip code or census tract is prohibited under ECOA.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

In 2020, Black borrowers were 80% more likely to be denied a mortgage than white borrowers. While this statistic is jarring, it is hardly surprising to those of us familiar with the US mortgage industry. A holistic look at America’s housing market shows that it disadvantages people of color in some startling and systemic ways that are not always obvious at the loan level.

The Fair Lending for All Act aims to change that. Introduced by Congressman Al Green, a Democrat from Texas, the bill clarifies the language of the Equal Credit Opportunity Act (ECOA) to better address systemic discrimination in mortgage lending. At the same time, it establishes a new bureau within the Consumer Financial Protection Bureau (CFPB) to test whether lenders are following federal guidelines as set out in the Home Mortgage Disclosure Act (HMDA) and ECOA. While seemingly obscure and legalistic, the Fair Lending for All Act will go a long way to making mortgage lending fairer and ending racial disparities in home ownership.

Disparate impact

Historically, Black homeowners have had to contend with systemic racism in the mortgage industry, contributing to lower levels and slower growth in homeownership among Black Americans. Through redlining – a process in which real estate agents and mortgage lenders steer Black renters and buyers into specific communities, contributing to de facto segregation – “agencies deemed Black communities too risky for federal home loan assistance, regardless of the income, wealth, or education of the inhabitants, or the quality or location of its housing stack,” Jim Carr, a former senior vice president of the Fannie Mae foundation, wrote last month.

According to Carr, this drastically slowed the rate of homeownership among Black Americans. The Black homeownership rate has increased only 4% over the past five decades. Meanwhile, the gap in homeownership between white and Black Americans was 5% lower in 1920 than it was in 2020.

This problem is then compounded by further economic inequalities Black Americans face. A recent study from the McKinsey Global Institute found that Black Americans make on average 30% less than white Americans. A disproportionate number of Black Americans have student loan debt, representing 13.4% of the population but nearly a quarter of all student loan debt incurred in 2019. Black borrowers also inherit less and receive fewer financial gifts from family members than do white Americans.

Debt-to-income and loan-to-value ratios have been higher for Black and Latino Americans. Data from the Federal Reserve shows that the median Black family has less than 15% the wealth of the median white family. What this means in practical terms is that Black and Latino borrowers have a higher amount of debt relative to their income. They, in turn, must borrow more on their homes, having less of a down payment to put towards the purchase.

Many lenders and underwriters will argue that there is no inherent racism here. If you qualify, you qualify, and if you don’t, you don’t. But in my own experience in the mortgage industry over the past decade, this kind of discrimination is not always apparent, even to the folks being discriminated against.

There are three types of discrimination which ECOA forbids: overt discrimination, comparative discrimination, and disparate impact. Overt discrimination is when a lender blatantly treats an applicant differently based on a protected characteristic, such as race or sex. Comparative discrimination results from “differences in treatment that are not fully explained by legitimate nondiscriminatory factors,” according to the Federal Reserve. The last type of discrimination, disparate impact, “occurs when a lender applies a racially (or otherwise) neutral policy or practice equally to all credit applicants but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis.”

If someone says “we don’t lend to Black people” or “unmarried women are charged a hire origination fee,” that’s overt discrimination. Other types of discrimination are not always so apparent. Some financial institutions may have policies which take into consideration a borrower’s census tract or zip code, which, due to racist practices like redlining, can have a discriminatory effect. This is one of the practices the Fair Lending for All Act hopes to curtail, making it clear that it is unlawful to discriminate based on census tract or zip code.

This clarification is welcome, as it will help loan officers and underwriters better understand the law. It will also require lenders to assess and even change policies which are currently leading to discrimination within the mortgage industry, whether unintentional or not. In doing so, it will make lending fairer to those who have been historically locked out of equal access to credit.

Giving Black homeowners a chance

A lot of the discrimination currently keeping Americans of color from equally accessing credit comes from seemingly race-neutral policies that are applied evenly but have a disparate impact. Loan officers make commissions based on the loan amount, and originating a smaller loan on a less-expensive house may not be as enticing as lending on a bigger loan in a more expensive neighborhood. I certainly heard “it’s not worth the work” several times in my mortgage career, though never in relation to an applicant’s race.

Still, given the income and wealth disparities previously discussed, the possibility for comparative discrimination is obvious but would only be apparent to someone looking at the totality of a loan officer’s or company’s production. As such, lenders “on the ground” may well not see that what they’re doing is discrimination, and borrowers who are covertly or comparatively discriminated against – and certainly those experiencing disparate impact – may not realize it, either.

That does not mean the results are not just as pernicious. In fact, these practices are making it harder to close the racial wealth gap. Last month, I was horrified but not surprised by the story of a Black woman in Indiana who discovered her home value doubled when she had a white friend stand in as the homeowner. Earlier this year, a study of house prices in Chicago’s Black and Latino neighborhoods showed there was a gap of $324,000 in the values of those homes between comparable properties in white neighborhoods. While this may seem astronomically high, the same sociologists who looked at Chicago’s study found last year that this is a national problem, with the gap being $245,000 nationwide. This, in turn, costs minority sellers hundreds of thousands in equity, which has a considerable impact on the racial wealth gap.

Minority buyers are also disadvantaged. The pandemic has exasperated gentrification, with home prices skyrocketing in even once-affordable communities. Carrying higher debt-to-income ratios (thus limiting the amount they can borrow) puts them at a disadvantage in bidding wars. On the other hand, borrowers with generational wealth and less debt might be able to either put more money towards the down payment, thus decreasing the LTV, or be able to borrow more because of a lower DTI. But again, minority borrowers are disadvantaged compared to their white counterparts. A Brookings Institute study last year found that “the net worth of a typical white family is nearly ten times greater than that of a Black family…” In a booming seller’s market, this disparity in wealth can leave minority borrowers unable to compete for housing.

These realities make ensuring lending is fair and unbiased a top priority for the federal government and lenders alike. An agency tasked with looking at the problem from a bird’s eye view – and therefore able to get a fuller picture of the situation – is needed. For these reasons, I am so encouraged by the Fair Lending for All Act. This bill establishes within the CFPB an Office of Fair Lending Testing. Charged with ensuring these disparities disappear, the Office of Fair Lending Testing would utilize what essentially amounts to “secret shoppers” to assess whether lenders are complying with ECOA and all other applicable antidiscrimination laws.

In doing so, CFPB can better assess individual loan officers’ and appraisers’ intentions, weeding out the ones who are overtly discriminating and addressing the companies which allow this. It can also correct behaviors which are leading to comparative discrimination or disparate impact, helping companies to develop best practices which ensure a fair lending process for all Americans.

Ending the racial income and wealth gap is an intergenerational project, and one we must start today. The Fair Lending for All Act can help Black and Latino Americans better secure a slice of the American dream that white people have already largely had access to. Congress must not pass up this opportunity to repair a broken rung on our nation’s housing ladder.

Read the original article on Business Insider

America’s housing crisis is the result of classist credit guidelines

Housing market
Potential home owners stop by an open house.

  • The way credit is scored and mortgages are underwritten is putting low-income borrowers at a disadvantage.
  • Lenders should have more freedom to count nontraditional credit, such as rent and utilities, in a borrower’s credit history.
  • The industry must change the way it treats student loan debt, which is increasingly keeping borrowers off the housing ladder.
  • Skylar Baker-Jordan is a freelance writer who has worked in the mortgage industry.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

America is in a housing crisis. “US home sales are surging. When does the music stop?” asked the New York Times’ Stephanos Chen last month. CNBC reports that “when is the housing bubble going to crash?” is a “red hot” Google search. Meanwhile, US News and World Report warns that “cities need a building boom to avoid a housing bubble.”

While inflated housing prices might be concerning, it is not the most pressing housing crisis facing America today. Much more alarming is the lack of affordable housing and the lack of financing options for low-income borrowers. The way we score credit, and the way we qualify borrowers, is inherently classist, and America’s fixation on wealthy borrowers and its credit scoring system are unfairly keeping low-income but responsible people off the housing ladder. If we really want to help people into homes, we must change the way we qualify borrowers for mortgages.

Bad credit

The lack of affordable housing is often cited as the most pressing obstacle to homeownership. This is indeed a problem. The coronavirus has left many homeowners reluctant to sell, whether for fears of financial insecurity or because they didn’t want strangers traipsing through their home during a pandemic. However, for those of us familiar with the mortgage industry – which I spent much of the past decade working in – the shortage of available homes for sale is nothing new.

In cities such as Chicago where I spent much of my mortgage career, deconversions are turning multi-unit dwellings to single family homes. An insufficient supply of newly constructed homes – a chronic problem since the Great Recession – has further led to a lack of supply throughout the country, especially for homes lower-income buyers can afford. According to the National Association of Realtors, home sales in the $100,000 – $250,000 range fell 11% from February 2020 to February 2021, while home sales over $1 million rose by 81%.

This means that lower-income homebuyers are competing for fewer available houses, but the problem does not end there. Virtually all of these borrowers will require a mortgage. While mortgage rates are historically low, mortgage guidelines are historically tight. This makes it difficult for responsible low-income borrowers to obtain a loan.

From an underwriting perspective, you want to look at the “Three Cs:” capacity to repay, collateral, and creditworthiness. Certainly, you want to know a borrower makes enough money to make timely mortgage payments and that they have a sufficient down payment (so that they have a financial stake in making said timely payments) and the home is worth what you are lending. It is how we determine creditworthiness, however, which is unfairly punishing lower-income borrowers.

You must have credit to get credit. Depending on the lender and the investor – that is, who the loan will be sold to on the secondary market, which is where servicing rights to loans as well as the mortgages themselves are sold (most often Fannie Mae or Freddie Mac) – you will need a certain amount of existing tradelines in order to obtain a mortgage. Yet even applying for credit can lower your score. Those with higher scores – usually (but not always) higher-earners – are better able to absorb this blow. Furthermore, lower-income and younger borrowers are less likely to have credit cards and other traditional tradelines that actually report to the bureaus that score credit, and a history of racial discrimination has left Black Americans at an unfair credit disadvantage.

These people are, however, paying bills, and often on time. Most people, even with insufficient traditional credit history, pay rent, electric, water, gas, phone bills, and so on. Yet these bills do not report on credit unless they go into collections, meaning that the bills lower-income people are paying do not help them but can hurt them.

This puts lower-income borrowers at a disadvantage and paints an incomplete picture of a borrower’s creditworthiness. After all, someone who might be delinquent on their credit card or jewelry payment might be very consistent in paying their rent and their electric bill, prioritizing needs (like housing) over luxuries. Credit reports will never show this.

This presents another problem with credit underwriting: We do not account for the bills people actually need to pay. Because the debt-to-income ratio (DTI) used in underwriting comes from the debts reporting on a borrower’s credit report, monthly expenditures like utilities and car insurance are not counted (again, unless they go delinquent). Adding these “nontraditional tradelines” to a credit report means counting them against the borrower when calculating their DTI. While some might argue that including these would do a disservice to lower-income borrowers, as it would increase the number of debts that underwriters must count against them (thus lowering purchase power), it is important that borrowers do factor these bills into any decision to buy a home. Including them in the DTI ratio would give everyone, including borrowers, a better idea of what they can and cannot reasonably afford.

Lenders are beginning to understand this problem. Quicken Loans is urging millennials to take out credit cards to drive up their credit score, while Veterans United – which specializes in lending to military veterans – touts the use of alternative tradelines to qualify VA borrowers. But simply utilizing nontraditional credit to gain a more accurate portrait of a borrower’s creditworthiness is not enough to address the lack of housing for lower-income Americans. We need to change the way we underwrite borrowers.

Down payment for a dream

Over the past decade, a cottage industry dedicated to dissecting why millennials are not buying homes has emerged. While many point to delayed marriage ages and a more rootless existence among this generation, the numbers show otherwise. A 2019 survey from the Urban Institute found that 53% of millennials said they could not afford a down payment, while 33% said they could not qualify for a mortgage.

Much of this is due to student loan debt. 83% of non-homeowners say they have student loan debt keeping them from buying a home. Lenders and investors need to look at new ways of treating this debt, which is increasingly ubiquitous and hindering borrowers’ ability to obtain a mortgage. Many borrowers defer student loans or are on income-based repayment plans. Fannie Mae has switched to factoring the actual payment into a borrower’s debt-to-income ratio, but FHA still takes “the greater of 1% of the outstanding balance on the loan; or the monthly payment reported on the Borrowers credit report; or the actual documented payment.”

Because of this, loan officers and underwriters are frequently forced to qualify borrowers with payments which are higher than the borrower’s actual payment. This lowers the purchase price and loan amount for which a borrower can qualify, hindering their ability to bid for homes in a market skewing more expensive by the year. And while it is true that the Federal Housing Administration (FHA) allows for higher DTI ratios than conventional lending, too often I have seen student loans put borrowers above even that qualifying threshold. This disproportionately hurts low-income borrowers, who might not qualify for conventional loans so rely on FHA to access credit.

This problem shows no signs of going away. Student loan debt is at a crisis point in the United States, and higher education an increasing necessity in an ever-changing job market. I saw this change happen in real time in the mortgage industry. The entry-level position I was hired for in 2011 then required only a high school diploma, but within two years my company was requiring entry-level applicants to have a college degree.

The mortgage industry has yet to adjust to this new reality. Underwriters should be allowed to treat student loans as they currently treat medical debt. Recognizing a fundamental unfairness in America’s healthcare system, lenders are regularly able to discount medical debt from a borrower’s DTI ratio. They should look at student loans the same way, understanding them as a necessity which should not stop borrowers from buying a home.

As anyone who has ever lent on new construction knows, it takes a long time to build a home. The housing shortage is not going to end anytime soon. We need to look at other ways to help solve America’s housing crisis, including making access to home loans fairer and more equitable. By modernizing credit scoring and underwriting practices, the mortgage industry can do its part to help a new generation of hard-working Americans achieve the dream of home ownership.

Read the original article on Business Insider

Strengthening credit quality and Biden’s massive infrastructure plan is setting industrial stocks up for further big gains

iBuilt's modular construction factory.
iBuilt’s modular construction factory.

  • The outlook for credit for industrial companies reached its best level in 15 months in March.
  • Industrial stocks have been gaining on economic growth prospects and an infrastructure bill in the pipeline.
  • The S&P Industrials sector has gained about 8% this year.
  • See more stories on Insider’s business page.

The strongest credit outlook for US industrial companies in more than a year and work in Washington on an infrastructure bill should support further stock gains for the sector.

A forward-looking index of credit opinions for industrial companies in March rose to its highest level in 15 months, with improved conditions arriving as shares of industrial firms, as a whole, have outpaced other sectors this year.

The Credit Consensus Indicators index came in at 50.6 in March, the best level since December 2019, said Credit Benchmark, which monitors internal credit risk views from more than 40 global financial institutions. The index in February was at 48.7 and readings below 50 indicate deterioration in credit quality.

The brighter credit outlook was supported by expansion in the US economy since it slumped into recession in 2020 as the COVID-19 crisis ramped up. The Commerce Department on Thursday upwardly revised its estimate of fourth-quarter 2020 growth to 4.3% from 4.1%.

For March credit readings, the “real standout this month is the US,” said Credit Benchmark in a note Thursday. “There may be also be growing optimism for the UK and EU, whose CCI scores inched closer to 50, although the EU’s economy isn’t as strong as the US’ and it has had struggles with vaccinations.”

Economists have said the vaccination of millions of Americans from the coronavirus crisis and fiscal stimulus packages passed in Washington – including the massive $1.9 trillion bill greenlighted in March – are key factors driving the recovery. But supply chain issues could also temper expectations in the industrial space, said Credit Benchmark.

Cyclical stocks have risen this year as investors position themselves with beneficiaries of economic growth. The S&P 500 Industrial Sector has gained about 8% so far this year, but lags behind the 13% rise for the financials sector.

President Joe Biden is expected next week to introduce his plans to bolster infrastructure spending in the country. The proposal could be worth up to $3 trillion and include focuses on roads and bridges.

Among exchange-traded funds in the industrial space, the Industrial Select Sector SPDR Fund and the Fidelity MSCI Industrials Index ETF have each gained about 9% during 2021.

Read the original article on Business Insider