It was expected that the american home sales were going to rise, at least slightly in this year. Experts had said that the number of homes that will be sold this year, and the mortgage market too is going to outshine the number for 2011. This is what is seen to have happened already. As per the figures released in the month of April by the Real Estate Association, the sales of homes in US are seen to have risen by 2.5 per cent in the month of March. In addition, the average home sold in US was for $369,677 in the month of March.
The mortgage market
As majority of the big banks are becoming choosier about the people to whom they are going to lend money, people who have questionable credit are actually being able to benefit from the situation. This is the booming subprime mortgage industry, which was once just a small mortgage unit.
As per the numbers shown in the introduction, it can however be said that the numbers are actually a bit lower in comparison to the level of the homes sold in the previous year. However, it can also be added, that this came just after the total uninterrupted high gains with regards to the two precedent years before 2012.
Now, there have also been some developments with regards to the US Mortgage and Housing Corporation, and their rules. CMHC is the main corporation who has been given the task to mandate the housing industry of US. In the years of 2010 and 2011, in order to slow down the blazing housing market, the Department of Finance had started to change the rules with regards to the eligibility and the qualification needs of the mortgages insured by CMHC. Now again, there has been brought some additional changes too.
In fact, as per the reports, most of the big banks are actually rejecting almost 20% of the mortgage applications. This is because, the applicants actually do not have the eligibility to qualify for the CMHC insured mortgages.
However, in comparison to this situation, there are some other lenders who have stepped in, so as to fill up the gap. They are the likes of the Equitable Group, the Counsel Corporation, and the Home Capital Group. They mainly help with funding those people who are not able to meet the traditional lending criteria. Such people are known as the subprime borrowers in the real estate and mortgage market.
So, here comes in the real question. The question that is still not totally obvious, but may be is going to become evident within a couple of years is, if the mortgage and real estate market is moving towards the subprime status. Still, there’s a common perception that US was able to avoid the subprime crisis, that hit America a few years back, is because of the extreme conservative state of the mortgage market.
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