Morning Must-Read: Andreas Fuster, Basit Zafar, and Matthew Cocci: Why Aren’t More Renters Becoming Homeowners?

Andreas Fuster, Basit Zafar, and Matthew Cocci: Why Aren’t More Renters Becoming Homeowners?: “With a stronger economy and eased credit standards…

…flows into homeownership would pick up. However, one caveat is that many potential buyers with relatively low credit scores (35 percent of renters in our sample think that their credit score is below 680) might now be ‘discouraged’, meaning that they are convinced that they would not be granted credit and thus may fail to apply for a mortgage even after an easing in standards. Also, relaxing credit standards may, of course, have undesirable consequences down the road, since borrowers with lower credit scores are at higher risk of default.