Capital Economics has shown a good deal of positivity by
saying they expect housing crisis to end this year and one of the vital
reasons: loosening credit.
The firm states that in order to qualify for a loan, the
borrower should attain an average credit score of at least 700, a bit higher by
pre-crisis standards but has been consistent with what was required a year ago.
It may come as a surprise but banks are now eager to lend
up to 3.5 times the borrower’s earnings compared to a staggering low of 3.2
times during the crisis. It’s an affirmation of loosening of credit
availability with our current situation.
Loan-to-valueratios (LTV) are being loosened, as Capital
Economics reiterates as “the clearest sign yet of an improvement in mortgage
credit conditions.”
From 74% in mid-2010, banks bumped up to lending 82% LTV.
This should not be taken as an upfront silver lining
though. Loosening of credit conditions does not mean lenient approvals as some
potential homebuyers are struggling with credit requirements. Capital Economics
came out with a figure, in November, 8% of contract fallouts were due to
potential buyers not being able to qualify for a loan.
With everything laid out on the table, Capital Economics
see this whole situation’s significance is not enough to pull actual house
price gains up a notch and more so, difficulties from the euro-zone may
potentially be a threat to future credit availability.
Any
thoughts about the improved credit conditions? If you have questions on
how how this current improvement can help you in buying your dream
home, call me, Mynor Herrera, I can also give you expert help buying or selling in the DC, MD, & VA areas! I also
specialize in Bethesda and Chevy Chase, as well as the sub-divisions of
Rosemary Hills, Rock Creek Forest, East Bethesda, and Whitehall
Condominium.
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