As banks are loosening credit, the housing crisis is expected to end this year, which is great news. This is due to the fact that mortgage lending has remained stable over the past three quarters, now in the forth, with the requirements of a credit score of 700. According to banks, they are now lending amounts up to 3.5 times borrower earnings, up from the low of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios, which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
With that said, if borrowing and credit conditions return to normal, maybe, just maybe, home sales will increase again!