Mortgage credit availability is the greatest that it has been in three years, according to Market Watch. The standards are likely to continue to loosen in 2014 from stringent post-crisis criteria while banks are continuing to adjust to new rules and increase home-loan revenue.
A gauge from the Mortgage Banker's Association tracked an increase of mortgage credit availability to 114 in March - up from 113.5 in the prior month. This is the highest reading in a the series's three-year history. March of 2012 was, in comparison, at 100.
March's credit gauge is, nonetheless, far below the MBA's estimate in 2007 for a level of 800.
Is availability equal for all buyers?
It is important to mention that, despite the loosening overall, not all buyers will equally benefit from a greater mortgage-credit availability. Lenders are increasingly providing jumbo loans - loans for greater amounts than the maximum able to be backed by federally controlled mortgage grants. It is traditionally tougher to qualify for these jumbo loans than traditional mortgages.
Buyers with greater means are, as you would expect, having an even easier time in this market. While annual sales of existing single-family homes between $500,00 and $750,000 rose 6.4% recently, single-family homes between $750,000 and $1 million rose 13%.
What this means for lower-income borrowers
New mortgage rules for lenders and borrowers in 2014 have raised concern for how it would effect lower-income borrowers. Executive vice president of the American Bankers Association is expecting standards to thaw, especially once the the lenders become more comfortable with the new regulations.
"There will be a tendency for some liberalization over the course of the year," Davis said.
Indeed, data already signals somewhat loosened standards. 16.7% of large banks eased credit standards for prime purchase mortgages recently, while 5.6% tightened, and the rest remained unchanged, according to the Federal Reserve's senior loan officer survey.
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