Housing News

It's Getting a Little Easier to Get a Mortgage

At a time when interest rates have never been lower, it is getting somewhat easier for borrowers to take advantage of those low rates.

A new report from the Mortgage Bankers Association shows that mortgage credit availability increased in January.

According to the report, the Mortgage Credit Availability Index (a view of whether credit is tightening or loosening) rose by 2% in January, meaning it got a little easier to get a mortgage last month.

However, it should be noted that credit availability declined sharply last year as the pandemic affected the housing business and the broader economy. According to the MBA report, the credit index declined by approximately 60 points over last year.

But that trend has reversed slightly over the last few months.

According to the report, the increase in credit availability in January was driven mainly by Conventional loans, which became easier to get. Conversely, government loans (FHA, VA, USDA) became a little more difficult to get.

"The growth in credit availability in January coincides with a housing market that is poised for a strong start to the year. Improvements were driven by the conventional segment of the mortgage market, as lenders added (adjustable-rate) loans with lower credit scores and higher (loan-to-value ratio) requirements," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

"Despite ARM loans accounting for a very small share of loan applications in recent months, lenders are likely looking ahead to a strong home buying season by expanding their product offerings," Kan continued. "Ongoing strength in home-purchase applications and home sales continue to signal robust housing demand, even as low housing inventory remains a constraint."

But, as Kan notes, even though overall credit availability has increased in three of the last four months, "credit supply is still at its tightest level since 2014."