Brocker.Org: Bank of America’s CEO says a pre-crisis idea could make it easier for millennials to buy homes

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Flickr/pacificbro

Mortgage lending standards have tightened since the housing
bubble brought down the financial system a decade ago. 

While homeownership has fallen, home prices have jumped back
to precrisis levels, suggesting that the cost and requirements
for getting a mortgage are holding back many would-be buyers.

Brian Moynihan, Bank of America’s CEO, told
CNBC
that eased regulations including a lower down
payment could make it easier for millennials, in their household
formation years, to buy homes. 

“Our goal, going back to regulatory reform, is should you
move the down payment requirement from 20% to 10%? Wouldn’t
introduce that much risk but would actually help a lot of
mortgages get done,” Moynihan told CNBC’s Kelly
Evans. 

Evans had asked Moynihan about mortgages in the context of
widely shared
comments
from Australian tycoon Tim Gurner last week, which
suggested millennials should stop spending on avocado toast
if they want to afford homes. 

Moynihan said he shared the article with his son, and added:

“I think at the end of the day people forget that, at different
points in your life and different points on what you’re doing in
life requires you to think about housing differently as a place
for you and your friends, as a place for you and maybe your
significant other, and then ultimately, a place for family. That
drives change. And so yes, it’s taken more time. And we talked a
lot about this, you know, four or five years ago, that if you
require a 20% down payment, it takes just a little more time to
accumulate 20% than it would 3% or none, which is what the rules
were for a short period of time.”

Leading up to the recession, some lenders lowered the 20% down
payment standard or required no down payment at all.

The scars from the housing crisis now make lenders cautious of
who they approve. In the first quarter, the
median credit score of a new mortgage
was 764, the highest in
nearly two years and up from the prerecession average of 720,
according to Gluskin Sheff. 

According to Moynihan, there’s still wiggle room to ease
regulations. 

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