Magazine article Mortgage Banking

MBA Research Paper Addresses 'Housing-Bubble' Talk

Magazine article Mortgage Banking

MBA Research Paper Addresses 'Housing-Bubble' Talk

Article excerpt

IN AN EFFORT TO POP THE NEAR-PERPETUAL talk of a house-price bubble, the Mortgage Bankers Association released a detailed study of the housing and mortgage markets.

The MBA white paper, Housing and Mortgage Markets: An Analysis, examined the current state of the housing market, the growth of innovative mortgage products and the impact of developments in the housing and mortgage markets on households, financial institutions, the financial markets and the economy.

The purpose of the study was to counter the virtual flood of commentaries and news stories which for several years have predicted an impending burst of the real estate and house-price bubble, according to Doug Duncan, MBA chief economist and senior vice president, research and business development.

"We continue to believe that consumers are not well-served by the term 'bubble,'" said Duncan, a contributing author to the paper.

Positive economic fundamentals--including low mortgage rates at the national level and strong employment growth rates locally--can explain much of the recent increase in house prices and many of the differentials in appreciation rates across the country, the analysis concluded.

The paper noted that investor activity has increased in certain U.S. housing markets, particularly on the coasts. Lenders need to prudently monitor the level of speculative activity in such markets.

"It is important to recognize that the mortgage market is fundamentally working," the report stated. "Lenders are innovatively creating mortgage products that meet the needs of borrowers, while taking appropriate measures to manage risk. …

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