Joe Moshé Says Loosening of Loan Requirements Will Boost Home Sales, Help Long Island Economy
May 29, 2014
PLAINVIEW, NY — Joe Moshé, Owner/Broker, Charles Rutenberg Realty, Inc., is urging banks and mortgage lenders to be less stringent with its requirements for loan applicants. He says that, by loosening the requirements, more people will be able to buy a house, thereby driving up home sales and improving Long Island’s economy.
Mel Watt, the new director of the U.S. Consumer Finance Protection Bureau, recently announced that he is looking into more relaxed standards for Fannie Mae and Freddie Mac-backed loans. This may mean doing away with the mandatory 20% down payment and lowering the loan limit of $417,000 ($625,000 in higher-priced markets).
This may come as a relief for those in the residential Real Estate market. Freddie Mac announced that interest rates fell for the fourth consecutive week for the week ending May 22. The average rate for a 30-year loan dropped to 4.14% last week, compared to 4.20% the week before. The average rate for a 15-year mortgage went from 3.29% two weeks ago to 3.25% last week. Freddie Mac also reported that only 40% of the housing markets in the U.S. showed year-over-year improvement; 12 months ago, 90% showed an improvement from the previous year.
Home sales on Long Island have been sluggish. Although 633 homes were sold in Nassau County last month — an increase over March’s number of 600 — home sales compared to last year (788) fell 19.7%. In Suffolk County, 739 homes were sold in April, which is a small increase (734 in March) but year-over-year sales were down 10.3%; in April 2013, there were 824 houses sold in Suffolk. However, this is below the most recent sales peak in August 2013 when 2,700 homes were sold on Long Island (1,340 in Nassau, 1,360 in Suffolk).
The first four months has also seen a sharp increase in inventories. At the beginning of this year, there were 5,538 unsold homes in Nassau and 8,478 in Suffolk, according to Multiple Listing Service of Long Island. Last month, the inventory in Nassau and Suffolk went up to 7,101 and 10,148, respectively.
“This does not even include the ‘shadow inventory’ that the banks are holding back from prospective homebuyers,” Mr. Moshé said. “The banks are making it more difficult for the Real Estate market to improve here on Long Island by not only requiring the 20 percent down payment, but by withholding these houses from being available on the market.”
Mr. Moshé emphasized that looser lending requirements will mean an increase in home sales; that, in turn, will give the local economy a boost and improve the job market. “If the lenders lift that requirement, then prospective buyers can get off the fence and take that step toward homeownership,” he said. “That would mean a big boost to the Long Island residential Real Estate market, where sales have improved slightly, although they are not close to where they were last year. The lower interest rates will also act as an incentive for those who want to buy a house.”
Charles Rutenberg Realty is one of the nation’s fastest-growing Agencies with more than 1,400 Agents on Long Island, Queens, Westchester, the Bronx and Manhattan. For more information, visit www.crrli.com.