The market's record low mortgage rates aren't having the positive affects that one would expect on market growth, according to The Motley Fool.
Housing affordability is higher than ever before, according to the National Association of Realtors Housing Affordability Index, which reached 205.4, its highest level since its inception.
The index's levels show that a median income family earning approximately $61,000 could afford a home costing $325,000. This is significantly above the median single-family home price of $158,000, which shows that consumer housing affordability is not the cause for slow growth in the residential housing market.
Mortgage rates have also been reaching record lows. Freddie Mac's May 24 report showed average mortgage market rates at 3.78 percent for a 30-year fixed-rate mortgage and 3.04 percent for a 15-year fixed-rate mortgage.
With these rates and the housing affordability data it appears that residential housing market growth should be booming, however tightened lending standards resulting from the 2008 credit crisis have kept mortgage lenders from approving home loans. In today's market environment, mortgage lenders are focused on tightening lending standards so as to avoid any further large scale defaults.
As a result, consumers in today's market must have good credit standing in order to obtain a loan, and the tightened standards and increased down payments for lower-level borrowers are keeping many consumers from the housing market.