Possibility of a New Bubble Concerns Lenders

tech-to-keyhole-300x198When you read the statistics below it does seems that a new bubble is a real possibility. For a more detailed look at this subject – please read the article below.

The FHA Condos Approval Company, Inc.

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As home prices continue to rise—albeit slower than last year—many commentators insist that fears of a new bubble in the making are overblown. However, a new survey released Tuesday suggests lenders aren’t buying it.

In a survey of U.S. and Canadian mortgage lenders conducted by the Professional Risk Managers’ International Association (PRMIA), FICO found 56 percent of respondents directly involved in the industry are concerned that “an unsustainable real estate bubble is inflating.”

“The home loan environment has bifurcated,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “Six million homeowners in the U.S. are still underwater on their mortgages, with the average negative equity a whopping 33 percent. Yet with home prices soaring in many cities, total homeowner equity in the U.S. is at its highest level since late 2007.

“That doesn’t feel like a healthy, sustainable growth situation,” he continued.

Surveyed about common concerns that arise during the underwriting process, most of the bankers surveyed—59 percent—pointed to “high debt-to-income ratio” as their top worry when approving any consumer loan.

Those respondents aren’t alone in their concern. In a recent report, the American Enterprise Institute’s International Center on Housing Risk suggested that high debt-to-income levels are to blame for today’s still-high loan risk.

To read the complete article – please use the link below.

Possibility of a New Bubble

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