If you’ve been putting off buying a home because you thought getting approved would be too hard, know this: qualifying for a mortgage is starting to get a bit more achievable, and the timing couldn’t be better.
From mid 2022 to 2024, countless buyers experienced “buyer fatigue” when they simply got worn out from multiple offer situations, rising interest rates, and increasing home values.
However, with recent market shifts that have added 35% more inventory than one year ago and nearly 70% more than two years ago, smart buyers are finding that they now have less competition, more willingness from sellers to negotiate on price, and a few tailwinds with lenders, making it slightly easier for well-qualified buyers to access financing.
To be sure, we’ve recuperated from “buyer fatigue” and opportunities have once again come back for buyers.
How Lenders Are Opening More Doors
Banks are offering credit to more people in an effort to boost activity in the housing market, including buyers who have lower credit scores or smaller down payments. And that means more people are getting approved for mortgages.
But it doesn’t mean we’re heading for another crash like 2008. Even with the slight easing lately, lending standards today are still much tighter than they were back then.
According to the Mortgage Bankers Association (MBA), the Mortgage Credit Availability Index (MCAI) has been going up. This index shows how easy or hard it is for people to get a mortgage.
When the index rises, it means banks are easing their lending standards. And in May, credit availability hit its highest point in almost three years (see graph below):
Why does this matter to you? It means you may now be able to qualify for a mortgage that you wouldn’t have just a few months ago. The National Association of Underwriters (NAMU) explains:
“Mortgage credit availability surged in May, reaching its highest level since August 2022. The uptick signals that lenders are increasingly willing to loosen underwriting standards, providing borrowers with greater access to financing options …“
But What About 2008?
Now, you might be thinking, “Didn’t looser lending standards play a role in the 2008 housing crash?” That’s a smart question – and an important one. But here’s the difference. While credit availability is rising, lending standards are still under control.
Based on MCAI data going all the way back to 2004, today’s lending levels are still way below what they were leading up to the housing bubble (see graph below):
So, increasing mortgage credit availability right now isn’t a concern. It’s just a good thing for anyone looking to buy a home. As Brett Hively, SVP of Mortgage, Finance, and Strategy at Ameris Bancorp, recently said:
“This uptick is opening the door for many borrowers to move forward with a home purchase or a refinance program.”
Bottom Line
So, if you’ve been holding back because you thought you couldn’t get approved for a mortgage, or that the market was still too competitive, it’s worth finding out what’s possible today and I’d love to help.
Let’s talk about it. Contact Me!
