Music to everyone’s ears, isn’t it?
Well, Capital Economics, an analytics firm, expects the housing crisis to end this year, according to a report released last Tuesday. One of the reasons: loosening credit. The average credit score required to obtain a mortgage loan remains at 700. Although this is higher than scores required before the housing crisis, it remains constant with requirements one year ago.
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, up from a low 3.2 times during the crisis.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” Banks are now lending at 82% LTV in contrast to 74% in mid-2010.
However, Capital Economics points out that while credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. Potential buyers not qualifying for loans resulted in 8 percent of contract cancellations in November.
Capital Economics also warned that the improvement in credit conditions is not significant enough to generate any actual house price gains, and potential ramifications from the euro-zone could affect credit availability in the future.
Read original article here.
Never thought the headline was real. It just felt good to put it up there.