Recent reports from the Mortgage Bankers Association show that the U.S. home mortgage market is on the rise.
According to a report by Reuters, the industry group found that applications for mortgages have increased in recent weeks, with the seasonally adjusted index of application activity increasing by 4.7 percent during the week ending on Jan. 17.
This is despite the fact that only last month the index hit its lowest point in 13 years on the news that the Federal Reserve would begin to pull back its $85 billion per month bond buying program.
Demand for mortgages isn't all that has been rising. A New York Times report found that buyers have begun to seek larger homes. One couple, Katie Sleep and her husband, Jonathan, told the news source how after living in a four-bedroom home in a Washington, D.C. suburb for 23 years, they plan to move to Virginia and build a home that is even larger. In fact, the couple is prepared to spend nearly $1.5 million on this prospect.
This is in sharp contrast with the state of the market only a few years ago, in the aftermath of the recession. Then, the number of homes sold for $750,000 to $1 million dropped by more than one-third.
Both of these reports show that home buyers appear willing and able to take on more debt to finance larger home purchases. Lenders will meet that demand, but they would be wise to use credit risk software to determine the ability of prospective buyers to repay these loans.