Capital Economics experts report a loosening credit in regards to mortgage loans

The analytics firm noted that the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the housing crisis, it has remained a constant credit score average for a year now.

Also there is a loosening of credit availability as , banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

In addition, lenders are loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”  In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV (Loan to Value).

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements.  In fact, Capital Economics points out that in November, 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Source: DSN news