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 generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
Why Get An Inspection? | ResultsforYou | Why Choose Me | Contact Cheryl | Lead in the Home | Insurance Closing Costs | Getting the Highest Price | Free Home Valuation | Find A Home! | How Escrow Works | Hampton Roads Relocation Expert | Resume | Accomplishments/Accreditations | SEARCH MLS LISTINGS HOMES | MilitaryRelocationSpecialist | HAMPTON ROADS PERFORMS | Buy Homes Norfolk | Today's Buyer | Buy Homes Chesapeake | Your Local School Connection | Best Local Neighborhoods | First Time Home Buyer | Va. Beach Real Estate Homes | Closing Costs | First Time Buyers | Get Pre-qualified | Inspection Tips | Looking to Buy? | News | YourLocalRelocationSpecialist | Our Homes For Sale | Looking to Sell? | Home | Applying for a Loan | Your Buying Power | Writing the Offer | Locking in Rates | Staging Your Home | Staging Checklist | 9 Steps to Owning | Fixed Rate Mtg Calc | 15 vs 30 Year Mtg Calc | Rent vs Buy Calc | Mortgage Calculators | Your Dream Home | 9 Steps to Ownership | How to Sell Your Home | Staging Your Home | Be Accessible! | Buying Foreclosures/REO's | Contingencies in Contracts | The Back Yard | The Kitchen | Flowers Add Curb Appeal! | Fixer Uppers | My Blog