Mortgage Requirements Are Easing
Rising mortgage rates have been all over the media (from 3.42% last September to the current 4.1% according to Freddie Mac). However, a less covered aspect of the mortgage market is the easing of requirements necessary to get a mortgage.
The Mortgage Credit Availability Index (MCAI) quantifies the availability of mortgage credit each month. The higher the index, the easier it is to get a mortgage. Here is a chart showing the MCAI over the last several months as rates have increased.
Have requirements for attaining a mortgage actually eased?
Yes. Here are two examples:
1. 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:
2. Down Payment Requirement– the percentage of the purchase price necessary to place as a down payment on a home. Take a look at the percentage of first-time home buyers who put less than 5% down over the last several years as compared to the 1st quarter of 2017:
Real Estate Bottom Line
Whether you are a current homeowner looking to move to a home that will better serve your family’s changing needs, or a first-time home 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 10 years.
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