Tightening Mortgage Standards Expected to Hit Housing Market This Spring
Christopher Low, chief economist at FTN Financial, told CNBC’s “Squawk Box” that he expects tightening mortgage standards to hit the housing market this spring.
“March, April and May that’s when I think you want to look for the initial impact of the tightening of credit standards,” he said Monday.
The New York metropolitan market remains strong, buoyed by fat Wall Street bonuses, but Low said housing prices in the rest of the nation are suffering.
He said those thinking about buying a house should wait because prices are likely to continue to fall despite about a 6% increase in new home sales likely to be reported Monday.
“When you look at subprimes, one of the reasons we saw this mess in the subprime sector first is that the standard teaser loan there is a two-year rate followed by an adjustment to a higher rate,” Low said. “In the prime market, the standard ARM is five years. So, the reset off the very low level is still coming.”