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Builders surveyed regarding mortgage lending standards

October 10th, 2014 7:49 AM by Brent Ferry

Survey: Builders say lending standards too tight

 

WASHINGTON – Oct. 9. 2014 – Tight mortgage lending standards continue to affect single-family builder sales, according to a survey released by the National Association of Home Builders (NAHB).

According to "well over half of the single-family builders surveyed," lending standards were "tight" or "very tight." Only 11 percent indicated that standards were "somewhat easy," and no builders described them as "very easy."

"While housing has seen some positive growth throughout the year, there is no denying that tight credit conditions are hindering a full, healthy housing recovery," says NAHB Chief Economist David Crowe. "These persistently tight mortgage credit standards continue to limit the number of creditworthy borrowers – particularly younger families and first-time home buyers – from entering the housing market."

The survey also asked builders if they had lost any sales over the past six months because potential buyers couldn't qualify for a mortgage, and 83 percent answered "yes." Of that 83 percent, the average number of lost sales was 9.7 percent.

NAHB estimates that the 9.7 percent translates into about 18,700 lost new-home sales because buyers couldn't qualify for a mortgage.

"NAHB advocates for prudent lending standards, but we've seen banks and regulators swing the pendulum too far and create an environment where lending standards are too restrictive," says NAHB Chairman Kevin Kelly. "We want a return to reasonable lending standards where qualified borrowers are able to obtain a mortgage and create the American dream for themselves."

© 2014 Florida Realtors®

A variety of excellent new construction opportunities have been launched or are on the horizon in the Orlando vacation home market. Builders in our area typically offer a network of affiliated Lenders who can get the job done for qualified Buyers. If pursuing financing, Buyers should expect down payments of around 30% particularly for those residing out of the country. The Builder deposit requirement will often match the anticipated down payment for mortgaged transactions. Cash transactions will require proof of funds and as little as just 10% deposit to lock in a lot and the current price with nothing else owed until construction is completed.

Due to heavy investor owner concentrations versus residents and other underwriting criteria, mortgage loans for condo resales are very scarce in the short term rental approved communities in our area. Buyers seeking a condo in popular resort rental communities such as Windsor Hills or Vista Cay currently should expect to pay all cash.
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Posted by Brent Ferry on October 10th, 2014 7:49 AM

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