Housing Bubble Inflating, Mortgage Lenders tell FICO - KMPH FOX 26 | Central San Joaquin Valley News Source

Housing Bubble Inflating, Mortgage Lenders tell FICO

Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact pressreleases@worldnow.com.

SOURCE FICO

Survey in U.S. and Canada finds consumer debt also source of concern; banks focusing heavily on debt-to-income ratio when making lending decisions

SAN JOSE, Calif., July 8, 2014 /PRNewswire/ -- Mortgage bankers fear another real estate bubble, according to the latest quarterly survey of North American bank risk managers conducted for FICO (NYSE:FICO), a leading predictive analytics and decision management software company. In the survey, 56 percent of respondents directly involved in mortgage lending expressed concern that "an unsustainable real estate bubble is inflating."

FICO Corporate logo.

"The home loan environment has bifurcated," said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. "Six million homeowners in the U.S. are still underwater on their mortgages, with the average negative equity a whopping 33 percent. Yet with home prices soaring in many cities, total homeowner equity in the U.S. is at its highest level since late 2007. That doesn't feel like a healthy, sustainable growth situation. No wonder many lenders in both Canada and the U.S. are concerned about the risk in residential mortgages."

Lenders Focused on Consumer Debt
The survey, conducted for FICO by the Professional Risk Managers' International Association (PRMIA), also looked at common concerns that arise during the underwriting process across all types of consumer loans. Most bankers surveyed (59 percent) cited "high debt-to-income ratio" as their top concern when approving loans. The second and third most common concerns were "multiple recent applications for credit" (13 percent) and "low FICO® Score" (10 percent).

"As consumer confidence picks up and people increase their borrowing, lenders are understandably concerned about growing indebtedness," said Mike Gordon, FICO's executive vice president of Sales, Services and Marketing. "For the last two quarters, around 65 percent of our respondents said they think credit card balances are headed higher. Those are the two highest figures we've ever seen in this survey. When I talk with bankers, they tell me they're happy to see growing consumer optimism, but they're wary of a return to reckless borrowing."

Brighter Outlook for Small Business Lending
Survey respondents throughout the U.S. and Canada were more optimistic this quarter than last when asked about small business lending. Twenty-six percent of those polled in the most recent survey said they expected delinquencies to increase on small business loans in the next six months. In the previous survey, 34 percent expected delinquencies to rise.

In addition, only 28 percent of respondents in the latest survey were concerned that the supply of credit for small businesses would fail to meet demand over the next six months. Last quarter, 40 percent of respondents believed supply would fall short of demand.

A detailed report of FICO's quarterly survey is available at http://www.fico.com/en/wp-content/secure_upload//FICO-2nd-Quarter-July-2014-Survey.pdf. The survey included responses from 203 risk managers at banks throughout the U.S. and Canada in May 2014. FICO and PRMIA express special thanks to Columbia Business School's Center for Decision Sciences for its assistance in analyzing the survey results.

About PRMIA
The Professional Risk Managers' International Association (PRMIA) is a higher standard for risk professionals, with 65 chapters worldwide. A non-profit, member-led association, PRMIA is dedicated to defining and implementing the best practices of risk management through education, including the Professional Risk Manager (PRM) designation and Associate PRM certificate; webinar, online, classroom and in-house training; events; networking; and online resources. More information can be found at www.PRMIA.org.

About FICO
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company's groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.

For FICO news and media resources, visit www.fico.com/news.

FICO and "Make every decision count" are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries.

Logo - http://photos.prnewswire.com/prnh/20111010/CG83314LOGO

©2012 PR Newswire. All Rights Reserved.

  • Local NewsLocal NewsMore>>

  • Police Arrest Man They Say Started Several Fires In Fresno

    Police Arrest Man They Say Started Several Fires In Fresno

    Efrain Mendoza was arrested Monday after being recognized by a detective from past surveillance videos.More >>
    Efrain Mendoza was arrested Monday after being recognized by a detective from past surveillance videos.More >>
  • Crews Battling Two Wildfires In Sierra National Forest

    Crews Battling Two Wildfires In Sierra National Forest

    Firefighters are working trying to put out two different wildfires burning in the Sierra Nevada Mountains near North Fork. The newest one is burning in steep terrain in Madera County just south of the Mammoth Pool Reservoir.More >>
    Firefighters are working trying to put out two different wildfires burning in the Sierra Nevada Mountains near North Fork. The newest one is burning in steep terrain in Madera County just south of the Mammoth Pool Reservoir.More >>
  • Fresno Firefighters Stung By Bees At Pool Hall Fire

    Fresno Firefighters Stung By Bees At Pool Hall Fire

    A fire at a pool hall closed roads between Cedar and Ninth Tuesday morning.The eastbound lanes were closed while firefighters put the fire out.No one was in the building at the time.But the building wasn't completely empty.As crews sprayed the flames, three firefighters were attacked and stung by bees.They are expected to be okay.More >>
    A fire at a pool hall closed roads between Cedar and Ninth Tuesday morning.The eastbound lanes were closed while firefighters put the fire out.No one was in the building at the time.But the building wasn't completely empty.As crews sprayed the flames, three firefighters were attacked and stung by bees.They are expected to be okay.More >>
Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and KMPH. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.