Posted by on December 5, 2016 5:18 am
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Categories: Business Economy Finance Financial economics Government policies and the subprime mortgage crisis Homeownership Rate Interest rates Loans money Mortgage loan Mortgage-backed security New York Fed Subprime lending Subprime mortgage crisis United States housing market correction

h/t National Bank Financial

Why is America’s homeownership rate at an all-time low despite rising household formation, record full-time employment and low interest rates? Perhaps, the trauma of the last housing crash is still fresh in the minds of potential home buyers who end up opting for rentals instead ? the rental vacancy rate is at a 31-year low. And prospective buyers who succeed in getting over that psychological barrier are then confronted by other obstacles such as tighter lending standards which pose problems, particularly for first-time home buyers holding student debt. After being burnt by lax lending during the subprime crisis, banks have gone to the other extreme as evidenced by latest data from the New York Fed which shows 58% of new mortgage originations this year has gone to borrowers with credit scores 760 and above. As today’s Hot Charts show, that’s the tightest mortgage standards in over a decade.

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