The media has extensively covered the rise in mortgage interest rates since last fall (from 3.42% last September to the current 4.1% according toFreddie Mac). However, a less covered aspect of the mortgage market is that requirements to get a mortgage have eased while rates have risen.
TheMortgage Bankers Association(MBA) quantifies the availability of mortgage credit each month with theirMortgage Credit Availability Index(MCAI). According to theMBA, theMCAIis:
“A summary measure which indicates the availability of mortgage credit at a point in time.”
The higher the index, the easier it is to get a mortgage. Here is a chart showing theMCAIover the last several months as rates have increased.
Have requirements for attaining a mortgage actually eased?
Yes. Here are two examples:
FICO®Score– the credit score which helps determine a buyer’s eligibility. The score required to attain a mortgage has been falling over the last five months:
Down Payment Requirement– the percentage of the purchase price necessary to place as a down payment on a home. To make this point, let’s look at the percentage of first-time buyers who have put less than 5% down over the last several years as compared to the 1stquarter of 2017:
Whether you are a current homeowner looking to move to a home that will better serve your family’s current needs, or a first-time buyer looking for a starter home, it is easier to get a mortgage today than it has been at any other time in the last ten years.
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