Experts: Easier-to-Get Mortgages May Not Draw More Buyers

Experts: Easier-to-Get Mortgages May Not Draw More Buyers

The FINANCIAL -- Most experts surveyed in the latest Zillow Home Price Expectations Survey said it's going to get easier to get a mortgage in the next several years, but they were divided about whether that would spur more renters to buy homes.

The survey, sponsored quarterly by Zillow and conducted by Pulsenomics LLCi, asked panelists about their expectations for mortgage availability, home values and housing trends.

Only seven percent of survey respondents said the current mortgage lending environment is too lax. Almost half (47 percent) said it is too restrictive, and 46 percent said it is about right. More than 60 percent expect regulations to loosen, with some panelists expressing concern about a return to bubble-era lending policies: four percent said mortgage restrictions will become too lax in the next year, and 25 percent said they will become too lax within the next five years, according to Zillow.

The Zillow Mortgage Access Index (ZMAI) rose in 2014, indicating looser lending rules, including lower credit-score requirements for conventional loans.

Panelists in the quarterly survey, which polls more than 100 housing experts, predicted slowing home value appreciation and looser lending restrictions in the next year. Despite that, 44 percent said they thought renter households would continue to outpace homeowner households, largely because of financial barriers, such as large debt burdens and slow wage growth.

Another 42 percent of the experts surveyed said looser credit restrictions, an improving economy, and the rising cost of renting would drive more people to buy in the next one to two years.

"Renters face several challenges," said Zillow Chief Economist Dr. Stan Humphries. "They need enough money on hand to start to buy homes. Even as mortgage credit becomes easier to obtain and home prices level off, renters are confronted with slow income growth and high rental rates. In addition, they face sometimes fierce competition for very few available homes in the market." 

Most of the 111 panelists who participated in this survey expect home values to level off in the next several years. The panel expected home values to rise 4.3 percent in 2015, to a median of $184,615. They expected that the average annual growth rate through 2019 would slow to 3.6 percent.

"The overall outlook for U.S. home values is largely unchanged compared to last quarter, and the expectations gap between the least optimistic and most optimistic experts continues to narrow," said Pulsenomics founder Terry Loebs. "However, the most optimistic panelists still expect home values to grow at more than twice the average annual pace of the least optimistic panelists. The gap between the two groups is significant, and amounts to a 2 ½ year difference in when the two groups expect U.S. home values to eclipse their pre-recession peak."