Banks and mortgage lenders are seeing an increase in applications for real estate loans and mortgages, as activity in the global housing market continues to gather steam, according to reports in Bloomberg.
US mortgage lenders have reported a strong surge in demand for home borrowing. This follows on from the effects of the credit crunch in 2008, caused by the burst of the sub-prime housing bubble in the US – the effects of which can still be felt through suppressed pricing and anemic demand.
However, with reports that US and European mortgage lenders are simultaneously seeing a return to borrowing, optimism is riding a recent high as analysts expect the market to return to stronger growth.
The news will be welcomed by those in the finance and construction industry, while governments are expected to respond positively to the developments. The level of activity in the housing market is often regarded as a strong barometer of economic performance, and increasing home building activity can have an impact on GDP growth data.
At a time when economies on both sides of the pond appear to be chasing GDP growth for political and social gain, this kind of development will come as some relief to those responsible for setting policy.
The global real estate market collapsed in the aftermath of the sub-prime mortgage bubble, in which homeowners nationwide were offered mortgages on conditions that were too lax and poorly regulated. Self-certified mortgages were offered to those with a sub-prime credit history, before being packaged up with other loans and divided up in a process known as securitization.
This securitization helped to spread the risk of these sub-prime investments, a factor that was to prove decisive in the events leading up to the global recession that would follow. Major banks, lenders and other institutions each held the others’ bad debt, and because the bad sub-prime loans were mixed in with good loans, slowly increasing rates of default across the US industry were enough to start a chain reaction that has since cost countless jobs, businesses and homes.
Even banks and mortgage lenders failed, with some notable examples. As a result, the industry is expected to be broadly welcoming of the news, which could suggest that a more stable, long-term recovery is underway.
Eagles Nest Living is one development that has benefited from an increasingly healthy home buying market. Without the supply of funding from banks and mortgage lenders to make real estate investments, would-be homeowners are prevented from fully contributing to the local and wider economy in this major way.
With markets returning to their healthiest position for several years, the benefits now could be felt right across the market. House prices would be expected to continue to rise over time, as demand for homes returns nationwide.
The real estate sector has undergone considerable reshaping and reformation in the years immediately following the global crash. The unprecedented drying up of capital left even those with otherwise legitimate applications for a mortgage being flatly declined, and held back countless hundreds of thousands of families, if not millions, from finding and buying the homes their families need.