Banks to Loosen Credit Requirements
What this will do for the Boise Housing Market in 2012
National firm Capital Economics has issued a report saying it expects the housing crisis to end this year. One of the main reasons, and it's about time is 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.
This is good news as it will help bring more buyers into the market, which is turn will increase prices (which is a good thing) because more people who are underwater can sell their home and not have to go the foreclosure/short sale route.
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