Nov 22 2017 5018 1

Dated: 11/22/2017

Views: 100

Bubble Alert! Is it Getting Too Easy to Get a Mortgage?

Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | MyKCM

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.

Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | MyKCM

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:

Bubble Alert! Is it Getting Too Easy to Get a Mortgage? | MyKCM

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.

Blog author image

Jeri Patrick

In today’s complex and difficult real estate market you need a professionals who will do whatever it takes to market and sell your home. Jeri Patrick has a team with an established history of succes....

Want to Advertise on this Site?

Latest Blog Posts

Oct 18 2018 5018 1

Is the Increase in Inventory a Bullish or Bearish Sign for Real Estate?In a recent article, National Housing Inventory Crisis Reaches Inflection Point, realtor.comreported that: New

Read More

Oct 17 2018 5018 1

5 Tips for Starting Your Home SearchIn today’s real estate market, with low inventory dominating the conversation in many areas of the country, it can often be frustrating to be a first-time

Read More

Oct 16 2018 5018 1

Baby Boomers are Downsizing, Are You Ready to Move?For a while now baby boomers have been blamed for a portion of the housing market’s current lack of housing inventory, but should they really be

Read More

3 DogFriendly Landscaping Tips

If you have a dog, embarking on a landscaping journey can mean asking yourself, “what plants will the dog be chewing?” or “what hardscaping material will be best?” While there is a yard full

Read More