The recent top economist for Capital Economics Ltd., Paul Dales, recently commented on the improving housing market, stating, “The bottom is behind us. I don’t think we will return to anything like the exceptional booming market we had five years ago (but) we will have a very steady, slow recovery, but a recovery nonetheless.”
There are several indicators which all point to the continued upward swing of the housing market, including the loosening credit standards. An additional indicator is the rise in availability of credit – good examples include a new initiative from the White House which allows homeowners holding FHA loans and looking to refinance into another FHA loan via the FHA Streamline Refinance program to pay 0.01% in upfront mortgage insurance premium (UFMIP). This is a large 99% discount off of the current UFMIP.
Additionally, banks also seem to be loosening loan-to-value ratios which Dales sees as “the clearest sign yet of an improvement in mortgage credit conditions.” Credit data from CreditForecast.com (backed by Equifax and Moody’s Analytics) also indicates that consumer credit patterns are returning to pre-recession levels. These are positive signs for the housing market.
Borrowers must still contend with tight documentation and underwriting guidelines. Underwriters who, in the past, could review six to seven loan files a day are now doing two to three per day, even when borrowers are considered “prime.” The takeaway is this: if you are thinking about purchasing a new home, ensure yourself of a good negotiating position by securing your loan commitment early in the process and consult with your real estate professional to help you in navigating the home-buying process.
If you are in the market to purchase or sell, today’s market environment is very promising. I would be glad to help you.