Banks May Ease Lending Standards Soon

DAILY REAL ESTATE NEWS | THURSDAY, AUGUST 15, 2013

With fewer home owners refinancing their mortgages because of rising interest rates, banks may soon relax their lending standards to ramp up business, according to the Mortgage Bankers Association. 

Credit availability has risen 3 percent since May — when mortgage rates began to rise — according to an MBA survey. Refinances have fallen 59 percent from a year ago, but applications for home purchases have risen 5 percent. 

In recent years, tight underwriting standards have been blamed on shutting out many people from the housing market. Many potential borrowers have been unable to meet requirements for higher credit scores and larger down payments in order to qualify for a loan. 

"As volumes slow, it makes sense that originators might ease some of their overlays as they now have the additional bandwidth to focus on slightly lower-quality loans or those loans that require more intense underwriting prior to approval, such as loans for self-employed individuals or investors that own multiple homes," Craig Strent, CEO of Maryland-based Apex Home Loans, told CNBC. "Competition for loans, particularly for home purchases, will continue to rise as refinances wane and originators look for continued loan volume to support the infrastructure they put in place during the recent refinance wave."

Inventory Crunch Over? More Homes Are For Sale

DAILY REAL ESTATE NEWS | WEDNESDAY, AUGUST 14, 2013

Inventory levels are on the rise nationwide, which could soon mean the severe inventory shortages plaguing many markets the last few months may soon be nearing an end, according to the latest report from realtor.com®. As home prices rise, more sellers may be testing the market, helping to increase the options for home buyers. 

Realtor.com® reported that 1.96 million homes were listed for sale in June -- the highest number since last September. 

The markets that posted the largest rises in the number of homes for sale compared to one year earlier were: 

• Atlanta: inventories rose 17.9% year-over-year
• Sacramento, Calif.: +16.7%
• Los Angeles: +6.8%
• Orlando: +2.8%

All four markets have also posted strong gains in home prices the past year, realtor.com® reports.

“At the current pace of sales, the supply of homes for sale is still very low, suggesting price gains are likely to continue,” The Wall Street Journal reports. “But the months supply is up slightly in a growing number of markets. This could actually boost sales — a major complaint of home shoppers and their real estate agents is that there’s a shortage of attractive homes being offered for sale.” 

Meanwhile, inventories of homes for-sale has fallen year-over-year levels in 26 of the markets realtor.com® monitors. Inventory levels fell the most in Detroit (by –30.2%); Boston (–28.9%), Denver (–25.1%), and San Francisco (–19.4%).