Mortgage Bankers Association
Is the market finally getting to the point where borrowers can start to enjoy looser credit? This appears to be the case, though certain factors make the overall economic picture somewhat difficult to judge accurately.
The latest report from the Mortgage Bankers Association showed that credit availability has increased by 1.85 percent between December and January, according to an article on Housing Wire.
This is being caused by two reasons. First, lenders are streamlining their programs, offering fewer products in some markets in response to the Consumer Financial Protection Bureau’s Qualified Mortgage (QM) Rule. Second, larger institutions have loosened their credit standards, according to the Federal Reserve’s Senior Loan Officer Survey.
In the past, this blog has written about how mortgages are still hard to get, despite a recovery in the housing market. If the current trend in credit availability continues, it could finally be a positive sign for those trying to purchase homes.
However, the Federal Reserve has also admitted lately that it is harder to assess the state of the economy than usual, due to recent bouts of poor winter weather.
In a speech at the University of Delaware covered by Reuters, Federal Reserve Bank of Philadelphia President Charles Plosser said that it may take a few months before a true reading of the economy can be achieved. That’s because it can be difficult to get a sense of consumer activity and employment patterns if large numbers of people are huddled at home during a snowstorm.
This is a reminder that even though the headlines are showing better economic news, there is always a benefit to more information. That’s why lenders need to use risk assessment software to perform a thorough analysis of each applicant’s creditworthiness.