Real Estate News and Advice
|December 20, 2013|
Mortgage Squeeze Loosens, Somewhat
by Broderick Perkins
With home prices skyrocketing in many metro areas and rising fast in others, many potential homebuyers who don't quickly get off the fence aren't going to be able to jump on the bandwagon.
Unfortunately, while rising prices and record low mortgage rates would otherwise prompt more consumers to take the home buying plunge, the continuing squeeze on mortgage credit continues to thwart them.
Some windows of opportunity are beginning to open in the tight mortgage credit market, but many consumers who've been unable for years to qualify for a mortgage still can't squeeze through.
Capital Economics recently looked at the tight mortgage market and found signs in the mortgage credit market that conditions are beginning to loosen.
Research reveals slightly looser mortgage credit
Eight percent isn't much, but credit conditions have been either loosened or held steady for eight of the past nine quarters. Also 27 percent of banks plan to up residential mortgage assets over the next year and know they can't do that without taking on a little more risk.
Capital Economics also said the Mortgage Bankers Association's (MBA) index of mortgage applications for home purchase has risen in seven of the past eight months and now stand at a three-year high, thanks to the housing recovery.
Credit conditions remain tight
The SLOS revealed only those with healthy credit ratings are passing muster with mortgage lenders and most lenders still demand 20 percent down.
Fear Fannie Mae and Freddie Mac will force lenders to take back risky mortgages continues to be the primary condition constraining lending. More than 45 percent of lenders fear that so-called "put back" risk.
Mortgage delinquencies are down but still high enough for about 40 percent of lenders to also fear a hit to their bottom line.
Other conditions that have lenders holding tight to mortgage purse strings include obtaining insurance; slow economic growth; concerns about securitization and processing capacity.
Lenders continue to remain understaffed as growing demand overlaps the waning foreclosure business.
Published: May 16, 2013
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Today's Real Estate Outlook
30 Year Fixed: 4.42%
15 Year Fixed: 3.43%
1 Year Adj: 2.51%
(U.S. Weekly Averages)
Today's Headlines 05/16/2013
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