Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit standards.
Other factors, such as: 1. The Federal Reserve committed to keeping mortgage rates to historic lows throughout this year, and beyond. 2. Home sales up again last month, and up again for the sixth straight consecutive year. 3. Consumer confidence up as a result of job growth, stabilizing US ecomony and bargain home prices. 4. The traditional "7-year housing cycle" ends this year.
Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with other expert assessments, saying “The pattern of home sales in recent months demonstrates a market in recovery.”
Additionally, other market indicators point not just to a stabilization of mortgage lending standards, but also an increase in credit availability.
Capital Economics notes the average credit score required to attain a mortgage loan is now down to 700. The lower score will open mortgage loans up to more consumers.
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 LTV reached in mid-2010, banks are now lending at 82 percent LTV. This loosing of restrictions on how much debt one carries to qualify for a mortgage loan, also opens approvals up to more home buyers.
The tide is turning. All markets have periods of growth and decline -- key indicators all suggest a housing recovery now underway.