Jeri Graydon Real Estate

Housing Crisis to End in 2012 as Banks Loosen Credit Standards

Thu, 15 Mar 2012 17:13:00 -0400

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: 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.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

Fast Facts

Thu, 12 Jan 2012 20:01:24 -0500

Calif. median home price: November 2011: $280,960 (Source: C.A.R.)
Calif. highest median home price by region/county November 2011: Marin: $736,410 (Source: C.A.R.)
Calif. lowest median home price by region/county November 2011: Madera: $103,330 (Source: C.A.R.)

Calif. Pending Home Sales Index: November 2011: 109.8, an increase of 11 percent compared with the prior year.

Calif. Traditional Housing Affordability Index: Third quarter 2011: 52 percent (Source: C.A.R.)

Mortgage rates: Week ending 1/5/2012 30-yr. fixed: 3.91% fees/points: 0.8% 15-yr. fixed: 3.23 fees/points: 0.8% 1-yr. adjustable: 2.80% Fees/points: 0.6% (Source: Freddie Mac)

Mortgage Applications Increase as Low Mortgage Rates Remain Steady

Wed, 14 Dec 2011 18:44:30 -0500

While economic data being reported for the U.S. has been on the positive side, global markets continue to react to European financial problems. The housing and mortgage markets are showing signs of recovery as mortgage applications increased 12.8% for the week ending December 2nd. Mortgage refinance applications were up 15.3% and purchases were up 8.3%. Freerateupdate.com’s survey of wholesale and direct lenders show that for the past week mortgage rates, except jumbo 30 year fixed mortgage rates, remained steady bringing in a surge of borrowers. 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.125% and 5/1 adjustable mortgage rates are at 2.500%.

Turning your dreams into realty...

Tue, 13 Dec 2011 14:21:00 -0500

When you’re looking to buy or sell a home in the Central Valley you want someone who knows the market and who is professional and experienced.

But real estate can be a daunting process. Your agent is a guide who should also be able to keep your adventure safe and fun.