Mortgage lending has actually gotten tighter this year, according to a CoreLogic index that says credit availability in May was about a third of what it was in the baseline year of 1998 — a decent parallel for the present, since housing markets were rebounding from the early ’90s downturn at the time. The CoreLogic index suggests lenders tightened the availability of purchase mortgages by 22 percent in the first five months of this year, Bloomberg’s Prashant Gopal reports.
In a piece exploring how even Ben Bernanke was recently turned down when he tried to refi his home, analyst Isaac Boltansky tells Gopal that policymakers know “the pendulum has swung too far toward restricting credit availability and there’s a concerted effort to expand the credit box in the weeks and months ahead.”
But George Mason University economics professor Anthony Sanders tells Gopal that stagnant wages are the main issue for housing markets.
“If you loosen up credit standards, there isn’t sufficient income to restart the fire,” Sanders said. “What you’d have to do is lower credit standards so much that it would be adverse to the economy if we had another default crisis.” Source: bloomberg.com.
