Archive for January, 2012
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 generation actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.
By Steve Goldstein
WASHINGTON (MarketWatch) — The National Association of Realtors on Friday said December sales rose 5% to a seasonally adjusted annual rate of 4.61 million. November sales were revised down to 4.39 million from an initially reported 4.42 million. Economists polled by MarketWatch had expected sales at a 4.7 million clip in December. For all of 2011, sales edged up 1.7% to 4.26 million – compared to the 2005 peak of 7.08 million. Median sales prices in December fell 2.5% from the same period of 2010 to $164,500, and for the year, median prices were $166,100, down 3.9% and back to 2002 levels. Inventories fell 9.2% to 2.38 million, which represents 6.2 months of supply. The months of supply of inventory were the lowest inventory since April 2006, though inventory levels are generally low in the winter.
By Ruth Mantell
WASHINGTON (MarketWatch) – The average rate on the 30-year fixed-rate mortgage ticked down to a record low of 3.88% in the week ended Jan. 19 from 3.89% in the prior week, Freddie Mac said Thursday in its weekly report. These data go back to 1971. A year ago, the 30-year rate was at 4.74%. “Mortgage rates were nearly unchanged this holiday week” amid mixed economic reports, said Frank Nothaft, Freddie’s chief economist, in a statement. To obtain the latest rate, payment of an average 0.8 point was required, according to Freddie, a buyer of residential mortgages. A point is 1% of the mortgage amount, charged in prepaid interest. The 15-year fixed-rate mortgage ticked higher to 3.17% in the latest week from a record low of 3.16% in the prior week. These data go back to 1991. Meanwhile, the average rate on the 5-year Treasury-indexed hybrid adjustable-rate mortgage remained at 2.82%, matching the record low set in the prior week. These data go back to 2005. The 1-year Treasury-indexed ARM fell to a record low of 2.74% from 2.76%. These data go back to 1984.
Vail Resorts is offering free photos on their mountains this season. The photos are posted to your Epicmix account and are available for sharing. A hi-res photo can be purchased if you like. The photo below is of me and Kim on Vail Mountain. This is a great new service!