Mortgage Market: Increased Foreclosures and Tighter Lending Standards
It is true, of course, that the economy is forefront in nearly everyone’s mind. And recent comments by Alan Greenspan regarding a recession only heightened the awareness. And today the Federal Reserve is continuing the trend. This time releasing information about the mortgage market.
Foreclosures expected to continued through 2008
Fed chair Ben Bernanke pointed out that subprime mortgages are the source of most of the foreclosures. However, he did address the fact that prime mortgages and near prime mortgage are also experiencing difficulties in terms of foreclosure. And the foreclosures are just beginning. Bernanke expects them to continue through the end of the year. This means that the real estate market is expected to see even more inventory as the year progresses. But the question then becomes this: Who will buy these foreclosures?
Lending standards tighten and demand for home mortgage loans declines
In another report issued by the Federal Reserve, trends regarding lending standards are examined, in addition to trends in demand for home mortgage loans. The Federal Reserve is reporting that lending standards are tightening, making it harder to buy a home. Additionally, these lending standards are also tightening for commercial real estate and industrial real estate.
The tightening lending standards, as well as fears over the deterioration of the real estate market, are in turn showing up as a decrease in demand for home mortgage loans. Discouraged by lending standards, and worried about declining home values, some are deciding not to even look for homes. This is likely to do little for the real estate market and the mortgage market beyond exacerbate the problem with growing inventory.
However, if you do plan to stay in a home for a while (flipping is out for the near term), and you can pass muster on the new lending standards, it is worth your while to buy soon, while home prices are low.
Tags: subprime mortgages, mortgage lenders, home mortgage loans, mortgage loan blog,
real estate market, foreclosures, lending standards
