It’s easier to get a home mortgage than it was last year.
But is it too easy?
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.
Lets 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.
You’ll notice right away, 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 defaultthat 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:
Again, todays 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.
It is getting easier to gain financing for a home purchase. However, we are not seeing the irresponsible lending that caused the housing crisis.
Be sure to speak with a Metropolist broker about the specifics of the Seattle real estate market directly. Ge the details from a professional who navigates our competitive market on a daily basis.
And meet us at Metropolist.