Inversely Between Mortgage Rates and Lending
A few years ago this would have been earth shattering news, but today it does little to bolster the soft housing market or to put more Americans into homes, 15-year mortgage rates decreased to nearly 4.0%. As mortgage rates have continued to decline in recent months, lending guidelines have done nothing but become more stringent for all loan types- conventional and government. Here’s why mortgage rates are down, but lending is almost out!
Expiration of Federal Tax Credit for Home Buyers - Many are content to rent now and ride out the crushing wave of the recession.
Tougher Loan Guidelines - Banks and mortgage lenders have instructed their underwriters to look extremely critically at every loan file and question every detail.
A Lack of Housing Inventory - It is not uncommon for buyers is some areas of the country to submit offers on 15+ properties before finally getting one accepted, a process that many people do not want to undertake.
Unemployment - Simply finding a new job does not mean that a lender will consider income from that job towards qualification.
Lack of Liquidity – Without sufficient savings for a down payment, closing costs, and adequate cash reserves home buying may not be a realistic option- even if income and credit are not a problem.
The problem now is going to be the time required not only for recovery, but then for a sustained period of stability, before banks and lenders have the courage to lighten up.
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