In April, I said that now is the best time to buy a home… whether a new or a previously owned one.
I saw several reasons to be optimistic about the housing market.
First, housing inventories are low. In other words, the supply side of the housing market is quite fixed.
Second, existing owners aren’t rushing to sell. They locked in low interest rates before the Fed started raising them and are holding on to those cheap mortgages.
On the supply side, the setup is bullish for house prices.
My research of the 18.6-year real estate cycle suggests we’re going to see a growing market for the next couple of years.
And now I see new data proving that I’m right…
Mortgage Availability Increased in March
Yes, the Fed has raised interest rates… but only back to historical norms.
But the mortgage lending market isn’t tied to the benchmark interest rates directly. There are other forces at play, including the supply of new houses and the demand for them on the part of potential homebuyers.
So even though interest rates remain higher than in the past few years, mortgage availability has improved.
In other words, it has gotten a little easier for people to get one…
According to the latest Mortgage Credit Availability Index, a report from the Mortgage Bankers Association that analyzes data from ICE Mortgage Technology, U.S. mortgage credit availability increased in March 2023.
Credit availability went up, but from a low point. It has a lot of room to run.
But now we have the earliest indicators that banks have become more willing to lend. And with the spring “buying” season well underway, I see their standards becoming looser still.
Banks Need to Make Money
Banks need to make money, simple as that. They can’t wait on the sidelines forever. With the likes of Apple getting into the banking game, they have quite a bit of fear of missing out.
So they will continue lowering their lending standards and increasing the amount of credit in the system – just as I predicted:
If tech giants are allowed to lend money against even a fraction of these insane cash holdings, they will add tens if not hundreds of billions of dollars in consumer credit.
And keep in mind that they don’t even need to attract depositor funds. They can lend against the cash they have already.
This “credit competition” is going to reach frenzy levels over the next several years… just mark this prediction.
Tech enters banking, banks get scared and start to frantically compete, the system gets overflowed with new credit, and drives the cycle to its end.
This is the beginning of the end. And a great time to position yourself to profit from what’s coming over the next two years or so.
Ignore the noise and follow the cycle.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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