Categorized | Residential

Economists Blaming Bankers for Stagnant Housing Market

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As economists, realtors, and government officials all try to determine how to improve the current state of the housing market, some are pointing their fingers at bankers as being a major part of the problem. Various economists around the United States are growing increasingly critical of bankers, and their increasingly stringent lending standards.

Following the housing crash that crippled the economy of the United States, many lenders opted to make their lending standards more restrictive so as to reduce the chances of foreclosure among those looking to secure a mortgage loan. By enforcing more stringent lending standards, the banks could essentially cut their losses.

It is those stringent lending standards, however, that have kept the housing market from showing the signs of improvement that have been expected with the significantly reduced mortgage loan rates available today. Many believed that housing sales would see strong increases with record-low interest rates, though in much of the country, that has simply not been the case.

The economists that are now blaming the banks for restrictions that are too tough claim that the housing market would see a jump of fifteen to twenty percent in the number of sales should the banks bring lending standards back to normal. Banks are requiring borrowers to have higher credit scores than ever before. In fact, those looking to borrow to buy a home must have a score that is at least forty points higher than it needed to be prior to the housing crash.

Not all economists, though, are blaming the banks. In fact, many are siding with the banks decision, as there is no guarantee that the banks will receive any kind of assistance against heavy losses should the market falter again.

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About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

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