It is true to say that it is easier to get a home mortgage today than it was last year. The Mortgage Credit Availability Index (MCAI), published by the Mortgage Bankers Association, shows that mortgage credit has become more available in each of the last several years. In fact, in just the last year:
More buyers are putting less than 20% down to purchase a home
The average credit score on closed mortgages is lower
More low-down-payment programs have been introduced
This has some people worrying and wondering if we are returning to the lax lending standards which led to the boom and bust that real estate experienced ten years ago. Let’s Take a look and alleviate some of that concern.
The graph below shows the MCAI going back to the boom years of 2004-2005. The higher the graph line, the easier it was to get a mortgage.
Lending standards were much more lenient from 2004 to 2007. Though it has gradually become easier to get a mortgage since 2011, we are nowhere near the lenient standards during the boom.
The Urban Institute also publishes a Home Credit Availability Index (HCAI). According to the Institute, the HCAI:
“Measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates … it is easier to get a loan.”
Look below to view their findings:
Again, today’s lending standards are nowhere near the levels of the boom years. As a matter of fact, they are more stringent than they were even before the boom. If you would like to speak with a Lender to ask more questions I have some great lenders you can talk to. Click the next line and leave me a message and I will be happy to have a lender contact you. It will be a lender I have worked with and trust.
It is getting easier to qualify and gain financing for a home purchase. However, we are not seeing the irresponsible lending that caused the housing crisis.