The widespread conception that tight mortgage lending standards are slowing the national housing recovery may be incorrect, CNBC reports.
After examining home lending data, Zillow chief economist Stan Humphries indicated the percentage of conventional mortgage applications being approved and leading to loan originations has actually increased between 2006 and 2010, and was higher in both years than in 2000.
According to Humphries, current credit standards do not stand out so much when taking a broader historical view. They are tighter in comparison to standards used in the last decade or so, and credit score requirements have increased even for government agencies like the Federal Housing Administration, which insures loans.
Other experts disagree. The National Association of Home Builders chief economist, David Crowe, noted some consumers may be sufficiently convinced of the difficulty in securing financing that they are not even trying, so there are no applications. Citing a survey from last spring, he indicated 73 percent of potential buyers who responded said they were not moving because of limited financing ability.
Lawrence Yun, chief economist of the National Association of Realtors, made a similar point. If true, the real estate market may be suffering more from the consumer perception of lending standards than the standards themselves.