Tighter Lending Holding Back U.S. Housing Market, Miller Says

The U.S. real estate market would be expanding if lending standards were more balanced and credit more available, according to Jonathan Miller of Miller Samuel Inc.

“We would probably have a housing boom with the rates that mortgage levels are at,” Miller, president and chief executive of New York-based appraiser Miller Samuel Inc., said during Bloomberg Television’s “Surveillance Midday,” with Tom Keene.

Rates (NMCMFUS) for 30-year U.S. mortgages have declined to 3.87 percent, the lowest in records dating to 1971, mortgage buyer Freddie Mac said today in a statement. While the Federal Reserve has helped lower borrowing costs by holding short-term interest rates near zero since 2008 and buying mortgage bonds, home loan borrowing is forecast to drop in 2012 to the least in 15 years.

Fed Chairman Ben S. Bernanke cited tightened lending standards last month in a paper sent to Congress as an obstacle to a housing and broader economy recovery. President Barack Obama said yesterday he will ask Congress for legislation to clear barriers to help more homeowners refinance into lower-rate loans.

The housing market also is being held back by mounting foreclosures, which are expected to rise above 2011 levels and push home prices lower in the coming year, according to a report from Irvine, California-based data firm RealtyTrac Inc. About 1.9 million homes were hit with foreclosure actions last year, the firm reported.

Miller forecasts “heavy foreclosure” volume over the next three years, with 1 million units being seized this year. Until inventory is cleared out, there won’t be a recovery, Miller said.

“The sooner you get it over with, the better we are in the long run,” Miller said.

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