Stricter Credit Restrictions Could Hurt Housing Recovery

Stricter Credit Restriction Could Hurt Housing Recovery

During the U.S. housing bubble, lenders were giving out too many mortgages to unqualified borrowers, which eventually led to a market crash.

To bring the market back under control, lenders put in tighter credit restrictions.

While this move is understandable, a new study from the National Association of Realtors suggests tighter credit restrictions could be blocking out qualified borrowers and hurting the housing recovery.

For this study, researchers gave surveys to new home buyers and sellers across the country. One of these surveys looked at whether buyers were married or not.

In 2013, 66 percent of new home buyers were married. This is up from 58 percent in 2010.

“In 2013, 66 percent of new

home buyers were married.”

Since 2010, lenders set new restrictions that favored married couples with two incomes over individuals, so it makes sense the market shifted this way.

However, Lawrence Yun, the chief economist at the National Association of Realtors, worries this shift is too dramatic. Before 2010, trends only moved by a percentage point or two each year.

Since the market shifted so much toward favoring married buyers, Yun suspects some qualified single buyers are being blocked from financing.

This could hurt the recovery because America still needs new buyers, especially as mortgage interest rates start going up.

While the long-term impact of this result is still uncertain, lenders should keep this information in mind as they design credit restrictions.

Single buyers should also be aware they might be at a disadvantage when they apply for a mortgage loan.

Source: Photo source:

Advertiser Disclosure is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free for users, we receive advertising compensation from the financial products listed on this page. Along with key review factors, this compensation may impact how and where products appear on the page (including, for example, the order in which they appear). does not include listings for all financial products.

Our Editorial Review Policy

Our site is committed to publishing independent, accurate content guided by strict editorial guidelines. Before articles and reviews are published on our site, they undergo a thorough review process performed by a team of independent editors and subject-matter experts to ensure the content’s accuracy, timeliness, and impartiality. Our editorial team is separate and independent of our site’s advertisers, and the opinions they express on our site are their own. To read more about our team members and their editorial backgrounds, please visit our site’s About page.