Capital Economics. an independent global macroeconomic research and consulting firm, reported on January 13, 2012 that as banks begin to lend more freely, housing sales appear to be rebounding. A few key changes are helping make this possible.
- Stabilizatoin of mortgage lending guidelines
- A loosening of available credit
- An increase in the amount loaned from 3.2 times borrower earnings to 3.5 times
- Loosening loan-to-value ratios (LTV) are noted in the report as the “clearest sign yet of an improvement in credit conditions.” Banks are now lending 82% LTV as opposed to 74% LTV back in mid-2010.
While these modest changes will not have a significant affect on housing price gains, they will allow a greater number of home buyers to enter into the housing market.