The Birmingham Business Journal reports that mortgage lending is still low but new development spreads hope. Andreas Rauterkus, UAB professor of finance, is quoted in the article about the low number of originations for purchases since 2005. “The decline in home lending is a reflection of the slump in the housing market,” says Rauterkus. “He said with the low number of home sales, coupled with more stringent mortgage regulations, it’s no surprise there’s been a drop in new purchase originations.
“It should have been just as difficult to get a mortgage in 2005, but lenders lowered their standards, and that’s what got us in this trouble in the first place,” he said. “Also since home values have declined, it’s hard to sell a house without being underwater on the mortgage. He added that the low-interest rate environment has encouraged more borrowers to refinance their loans.