03.27.15 by Jeff Johnson
Many home buyers found it easier to obtain a mortgage in the first quarter of 2015, and it looks like that lender stance will hold into the second quarter, according to the inaugural Zillow Mortgage Access Index (ZMAI).
New loan options are helping, and getting a mortgage now is considerably easier than it was a year ago. In fact, access to mortgages is about two-thirds of the way back to 2002 levels, which was before the housing bubble and crisis distorted home values and borrowers’ ability to buy homes, and when lenders still meticulously underwrote a fully documented borrower profile. In 2003, loan approval standards deteriorated quickly, becoming so loose that almost anyone could get a loan with no documentation. This was the case until the second quarter of 2007, when plummeting home prices and a deep recession forced lenders to become extremely stringent for many years.
Access to home loans peaked in August 2004, the ZMAI shows, after which it gradually became more difficult to get a mortgage — until the crisis hit in 2007. At that point, mortgages were suddenly much harder to come by, with the tightest period being September 2010. Recently, lenders have started to return to a meticulous-but-flexible approach to loan approvals. Housing and economic trends indicate this could continue in the second quarter.
In the past two years, lenders have opened their doors wider, the Index shows. Now, many people who last year might have been eligible only for FHA loans because of their low credit scores or down payments are being offered conventional loans with private mortgage insurance.
The ZMAI took into account credit scores, debt-to-income ratios, private mortgage insurance, second mortgages, non-conforming loans, the mortgage rate spread and Zillow Mortgage Quotes.