The housing crisis is set to end this year because of loosening credit, according to a new report.
Data from analytics firm Capital Economics reveals that market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings - up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics regards as “the clearest sign yet of an improvement in mortgage credit conditions”.
In contrast to a low of 74 per cent reached in mid-2010, banks are now lending at 82 per cent LTV.
The report notes the average credit score required to obtain a mortgage loan is 700 which, while higher than scores required prior to the crisis, is constant with requirements one year ago.
Welcoming the report, Adam Offer, managing director of leading South West estate agents Besley Hill, said he shares Capital Economics’ confidence in the future of the housing market.
“The level of current activity at our network of 15 branches throughout Bristol and Gloucestershire all points to the fact that the worst is over with the prospect of a much improved year ahead,” said Mr Offer.
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