The California Association of Mortgage Brokers (CAMB) released its annual mortgage survey for 2008 this week, claiming that the ongoing housing crisis could lead to a recession if the conforming limit isn’t raised in California.
When asked if the current housing slump will create a recession in 2008, 47 percent of mortgage brokers surveyed said yes, while 43 percent believe the real estate market will not fully rebound until 2009.
“In order to stem the tide of a possible recession, CAMB is calling upon state and federal legislators to designate California a high cost state, which will increase the limit for conforming loans in California and provide a more stable mortgage product for consumers,” said Pete Ogilvie, president of the California Association of Mortgage Brokers, in a statement.
Despite the recession worries, 48 percent of members believe that housing affordability will get a little better in 2008 and 17 percent believe it will get a lot better.
“While home prices will continue to decrease into 2008, more stable loan products will reappear for consumers looking to purchase a home,” said Ogilvie. “2008 will be the year of market self-correction, and should also reward those who have been waiting for affordable housing prices.”
Fifty-five percent of those surveyed believe the FHA loan will return to popularity in 2008, while 18 percent feel products such as mortgage insurance will rise in popularity.
At the same time, 59 percent of members believe that qualifying borrowers will be more difficult in 2008 due to tighter underwriting standards, especially for those with below-average credit scores.
And 41 percent think it will be more difficult to find a loan program for qualified borrowers next year.
Additionally, 60 percent of those surveyed believe cash-out refinances will decrease in 2008 as homeowners will likely be wary of refinancing their homes during a declining market, assuming they have any home equity to begin with.
Finally, 31 percent of surveyed members believe that April-June of 2008 will be the best time to buy a home, with 28 percent saying the January-March period will be the right time.