Last year, the housing market witnessed record low mortgage rates and a boom in home purchases. This year not so much, but the forecast ahead is brighter, according to Compass Point Research & Trading.
The Federal Reserve’s latest data revealed that homeowners in the United States had the value of their home equity increase $794 billion in the first quarter of 2014 and in $2.1 trillion over the past year.
“Although we are not seeing the effects of this massive growth in the near-term, it is bound to make its way into the market,” the report stated.
Loosening credit standards, homeowners becoming more mobile, home equity lending being more prevalent and underwater borrowers refinancing into better mortgage rates, is slowly helping to buoy the economy.
Evidence of this is already trickling in from this week’s latest housing reports.
The Mortgage Bankers Association posted that mortgage credit availability increased in May as the industry slightly loosened the reigns on standards.
“The impetus for this credit expansion has been the improvement in real estate values, economy and credit quality of borrowers,” Chris Garagusi, vice president, mortgage capital markets product manager with BOK Financial Mortgage, said.
Meanwhile, CoreLogic found that 300,000 homes returned to positive equity in the first quarter of 2014, bringing the total number of mortgage residential properties with equity to more than 43 million.
The financial crisis put a lot of pressure on banks to pull back on lending, Ron D'Vari, CEO and co-founder of NewOak, explained.
“It’s good news that home prices are up and good news for banks that can now provide the facilities for people to improve their home and buy a car,” D’Vari said.