How easy or hard it is for St. Cloud home buyers to secure a mortgage with attractive terms is a key element in the local real estate picture. St. Cloud mortgage credit provides the oil that that keeps residential home sales moving smoothly; that, or it becomes a damper (or even something close to an emergency brake!).
The St. Cloud mortgage credit situation is largely a reflection of what’s going on in the greater financial world, where the corporate banking interests, world economic conditions, and political realities converge. It is in that greater arena where the counterproductive effects of tightening mortgage credit availability have been acknowledged for some time. At first, it seemed to be little more than talk, but recently, changes have been stirring. The resulting tinkering seems to be taking effect.
“U.S. consumers are finding it easier to get a mortgage,” was last Thursday’s finding by CNBC in their Reality Check. The commentary was headlined “A CREDIT THAW IS OFFERING MORE MORTGAGE OPTIONS.” In fact, it fairly bristled with refrigeration metaphors. Following “years of near frozen credit following the financial crisis” there was now “heat behind the credit thaw.” If you expected that the source of the heat was the springtime improvement in St. Cloud’s weather, you were mistaken. It was “simple clarification.”
The simple clarification lies in a chain of repercussions that requires some clarification of their own. It has to do with the usual suspects: Fannie and Freddie. Fannie Mae and Freddie Mac (the guarantors behind the majority of mortgage credit in St. Cloud and throughout the country) had sued lenders left and right following the subprime mortgage market mess. It cost the banks and mortgage companies billions through lawsuits and loan buybacks. Lenders, who like many of us don’t like to lose billions, became understandably gun-shy. They demanded near-pristine credit from borrowers, because they didn’t want Fannie and Freddie (and sometimes their Uncle, Sam) to come after them again.
Rates may have been terrific, but for way too many St. Cloud would-be borrowers, those rates were attached to loans that weren’t being offered. It wasn’t exactly Bait-and-Switch; more like Bait-and-Goodbye. But new rules that clarify which loans are considered safe by the semi-governmental concerns have done away with a considerable degree of lender concern. Added to the nationwide increase in activity (the Mortgage Bankers Association registered a single month increase of 17% in new home applications in March), it seems likely that the defrosting described by CNBC should continue well past cherry blossom time.
Today’s St. Cloud mortgage credit landscape is something that directly affects most buyer-applicants as well as St. Cloud home sellers, so that’s welcome news—and a good reason why now is a good time to give me a call!