While the consensus of many economists and analysts is that the housing market is in recovery mode, the debate is now over how long it will take for the industry to regain full strength.
Home prices, home sales and construction have all picked up. Foreclosure applications are decreasing and mortgage rates continue to drop to record lows. Even so, an amortization schedule will ensure that borrowers are given a repayment plan that is catered to their individual needs.
This will be especially handy, as according to a recent CNNMoney article, the emerging housing recovery is thought to be stronger than many had originally anticipated. For example, Barclay's capital forecasted that home prices, which fell by more than a third after the housing bubble burst in 2007, could be back to peak levels as soon as 2015.
"In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a rapid rise in housing starts," Stephen Kim, an analyst with Barclays, said in a note to clients.
Federal Reserve calls this a different kind of recovery
William Dudley, CEO for the Federal Reserve Bank of New York, said in a recent HousingWire article that the subprime bubble bursting had far-reaching effects, beyond that of just the United States. From that, it will make it more difficult for the nation's households to recover.
Dudley cited a main reason for the struggling U.S. economy to be inadequate aggregate demand. Low interest rates that would normally help in a recovery had no effect because high inventory levels and tighter mortgage underwriting made an increase in home purchases difficult, he said.
Until the housing market – and economy as a whole – is on stable ground, lenders would be wise to use loan management software to help create payment plans for hopeful borrowers.