WASHINGTON – April 14, 2014 – Access to mortgage credit is at its highest level in at least three years, and credit standards are expected to loosen even more this year, according to a newly released index by the Mortgage Bankers Association (MBA).
MBA's index, which tracks mortgage credit availability, shows that in March the gauge rose to 114 – the highest reading in the gauge's three-year history.
"I don't think there's any question that mortgage underwriting has gotten easier or is looser than it was two or three years ago, but it's nowhere near where it was in 2005, 2006," Guy Cecala, publisher of Inside Mortgage Finance, told The Wall Street Journal. "We are talking about easing from extremely tight underwriting standards."
Some housing experts worried that new mortgage rules for lenders and borrowers this year would tighten credit access. Indeed, 80 percent of bankers said they expected the new regulations to have a "measurable reduction in credit availability," according to a survey by the American Bankers Association.
However, Bob Davis, ABA's executive vice president, says standards will likely loosen up as lenders adapt to the new rules.
"There will be a tendency for some liberalization over the course of the year," Davis told The Wall Street Journal. The reason: Lending experts say that the number of mortgage refinancing applications has fallen drastically over the past year, and more banks will probably look to the home-purchase market to make up for that lost share of income.
Nearly 17 percent of large banks have recently eased credit standards for prime purchase mortgages, while 5.6 percent have tightened their standards and the remainder have left standards the same, according to the Federal Reserve's recent senior loan officer survey.
Source: "Mortgage Credit Most Available in at Least Three Years, Gauge Says," The Wall Street Journal (April 9, 2014)
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