Housing Crisis 2012

By
Real Estate Agent with Jane Brown Assoc

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

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Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

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Home Buying
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housing crisis

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Rainer
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JOSH EVANS *JoshEvansHomes 516-655-5000
Village Properties of Mineola, LLC - Mineola, NY

Great blog and great job. Keep up the good work and good luck to you this year. Thanks 

Mar 05, 2012 08:11 PM #1
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Tina Marinelli
Jane Brown Assoc - Edgartown, MA

Thank you and the best to you as well.

Tina Marinelli

Hughes JC Murphy RE LLP

http://www.hughesandjcmurphyrealestate.com/MVLL/

Mar 05, 2012 08:29 PM #2
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Tina Marinelli

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