Bubble Alert Is It Getting Too Easy To Get A Mortgage

Dated: 12/06/2017

Views: 15

Image title

There is little doubt 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 that we are returning to the lax lending standards which led to the boom and bust that real estate experienced ten years ago. Let’s 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.


Image title

As you can see, 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.”

Here is a graph showing their findings:

Image title

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.

Bottom Line

It is getting easier to gain financing for a home purchase. However, we are not seeing the irresponsible lending that caused the housing crisis.


Read this & other articles here

Latest Blog Posts

A Tale Of Two Markets

Some Highlights:A trend that has been emerging for some time now is the contrast between inventory & demand in the Premium & Luxury Markets vs. the Starter & Trade-Up Home Markets and what that’s,

Read More

West Bloomfield Twp Real Estate Find Your Perfect Home For Sale

West Bloomfield Twp - Town vs. County StatsAvg Price in West Bloomfield Twp: $603,300/Co. Avg $542,40056%Avg Taxes in West Bloomfield Twp: $7,200/Co.. Avg $5,00072%Avg Sq. Ft. in West

Read More

HOMES IN WEST BLOOMFIELD

http://kendrapack.mi.exprealty.com/property/83-218023934-6625-Fireside-Court-West-Bloomfield-Twp-MI

Read More

The COST Of Your Next Home Will Be LESS Than Your Parents Home Was

There is no doubt that the price of a home in most regions of the country is greater now than at any time in history. However, when we look at the cost of a home, it is cheaper to own today than it

Read More