Mortgage borrowing is back, according to the results of the latest financial accounts report from the Federal Reserve, highlighted in this article from Victoria Stilwell of Bloomberg.
The ability to get a mortgage has been one of the biggest obstacles to the housing market since the financial crisis, as only the most qualified borrowers were able to get a home loan. Now, that’s changing.
Outstanding home mortgage debt in the U.S. posted a 0.5 percent increase in the second quarter from the year before, the Fed’s financial accounts report on Friday showed. That’s the first year-over-year gain in mortgage debt since 2008, ending a streak of contraction that was unrivaled in data going back to 1949.
“This strikes us as a key turning point for the U.S. housing market, since it is obviously much easier to support an increase in sales volume and prices with a growing pool of finance,” Michael Shaoul, chief executive officer of Marketfield Asset Management LLC in New York, wrote in a note to clients. “It also confirms some of the loan officer surveys that have suggested that mortgage lending standards are finally loosening at the same time that a stronger labor market increases the pool of willing and able borrowers.”
In addition to less stringent lending standards, a labor market that’s added 1.7 million jobs this year should help potential home-buyers get back in the game. Rising rents may also provide some incentive as they rival a mortgage payment.
