Looser Credit Standards Brings Housing Hope?

According to the analytics firm, Capital Management, the housing crisis will actually end this year, thanks to looser credit standards and availability for borrowers. Borrowers are required to have a credit score of 700 or higher to obtain a mortgage loan. This is consistent with numbers from a year ago. In addition, banks are “lending amounts up to 3.5 times borrower’s earnings,” up from a low of 3.2. Capital Economics also points to the loan-to-value rations that are looser, 82% vs. 74% in mid-2010. This is their “clearest sign yet of an improvement in mortgage credit conditions.” Despite the improvement, approximately 8% of applicants fail to qualify for a mortgage loan. Capital Economics warns that these signs are not enough to generate notable house price gains.

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