The Boston North Shore mortgage forecast – at least for the near future – is that home loans will continue to be easier to obtain than anytime in the last ten years. The Mortgage Bankers Association (MBA) recently published a report showing data that seems to suggest mortgage lenders have relaxed many of their lending regulations and standards for every type of loan – including FHA and USDA home loans – both backed by the U.S. government.
Between 2008 and 2016, it was estimated credit availability to take out mortgages tightened by close to 90%, according to an MBA report. However, today’s Boston North Shore mortgage forecast is brighter than before, and more people are qualifying for loans than in the last decade. Officials say even those borrowers who may have been turned down for a mortgage loan a year or more ago are likely to be granted financing in today’s lending environment.
Let’s Look at the Numbers
The MBA publishes its Mortgage Availability Index (MCAI) every month in an effort to show the current mortgage lending market as a single number. The MBA obtains data from over 95 lenders nationwide, looking at loan-to-value ratios, FICO credit scores and lending limits as a measure of how much or little flexibility there are in loan guidelines.
The most recent report shows the MCAI at a fairly high 177.1 – a huge increase from what many term its benchmark index of March 2012 of 100. What this means is that mortgages are almost twice as easy to obtain as they were just five short years ago.
The Boston North Shore mortgage forecast is for relaxed lending standards to not only continue to be a part of a mortgage lender’s loan guidelines, but they’re making an impact in other areas as well. Mortgage software company Ellie Mae just released a report showing mortgage lenders approve 77% of applicants – an increase of 6% in roughly 18 months. In addition, the MCAI rose 1.1% in only one month. The report also showed that lenders have relaxed lending requirements for loans above the national conforming loan maximum of $424,100.
Availability, as a result, has increased for nearly every type of loan offered:
- Government mortgage availability rose 0.2% from the prior month
- Conventional mortgage loan availability was up 2.3% from the previous month
- Jumbo mortgage availability increased 4.7% from the prior month
Government mortgages referenced above include the three major lending programs – the FHA loan, the VA loan and the USDA mortgage.
USDA Loans Increase Government Mortgage Availability
First-time home buyers really like the little-known USDA home loan program. USDA loans require no down payment, one of only two loan products with that feature – the other being the VA loan – which is available to current or previous members of the Armed Forces. USDA loans are also known as Rural Housing Loans and eligibility requirements are based on the home’s location. Primarily, neighborhoods throughout the U.S. that are in less densely populated areas are the easiest in which to qualify. Before you assume these programs are available only to homes located “in the boonies,” consider this – the eligibility maps are 17 years old. In many areas, was characterized as “rural” in 2000 could be part of suburbia today. The Boston North Shore mortgage forecast will continue to be impacted by USDA loans.
The Housing Market Remains Safe
Mention the increased availability of mortgage credit and some people immediately equate that with concern for another housing market crash. In their minds, the logic is easy mortgage availability was responsible for the housing crisis back in 2008 and 2009 – so, if credit becomes easy to obtain we are likely to repeat history. However, here’s something that may calm your fears. Remember the Mortgage Banker’s Association (MBA) MCAI index report discussed earlier? The MBA estimates it reached close to 900 during the bubble in late 2006. Again, the index today is just 177.1. Industry experts say the Boston North Shore mortgage forecast is for credit availability to remain strong – and safe – because the housing market is a different animal than it was over a decade ago. Lenders are less likely to be as lax as they were in the years leading up to the housing crisis.
Lastly, mortgage lenders today are more cognizant that making good, sound mortgage loans is the foundation of the housing industry. There are more safeguards in place to prevent history from repeating itself than ever before – primarily as a result of the housing crash. Borrowers today need to have good credit – not excellent, blemish-free credit reports – but a history of paying their monthly obligations on time, over time. In addition, they need sufficient income to qualify for the monthly payments. Of course, they need to have a sufficient down payment to qualify for most mortgage loans, though not all.
Simply put, we remain optimistic with the Boston North Shore mortgage forecast for 2017 and beyond. Here’s hoping the housing market will continue to recover to its full capacity.
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