Getting a Mortgage Just Became Easier

It’s getting a little easier to get a mortgage. The latest Housing Credit Availability Index (HCAI) from the Urban Institute’s Housing Finance Policy Center found credit expansions in mortgage lending, particularly at the GSEs and government channels, during the first quarter of this year. In fact, access to mortgage credit has expanded for the past three quarters, according to the report.

Despite the recent expansions though, the Urban Institute said, “Significant space remains to safely expand the credit box.”

In fact, the report pointed out, “If the current default risk was doubled across all channels, the risk would still be well within the pre-crisis standard of 12.5 percent from 2001 to 2003 for the whole mortgage market.”

Compared to that 12.5 percent benchmark, today’s risk rate stands at 5.9 percent, up just slightly from the previous quarter’s 5.8 percent.

The Housing Credit Availability Index measures the percent of purchase mortgages that are likely to fall into delinquency—becoming 90 days or more past due.

After dropping off sharply post-crisis, the GSEs began expanding credit starting in the second quarter of 2011. The GSEs have since slightly more than doubled their credit risk level from 1.4 percent to 2.9 percent, according to the Urban Institute.

Similarly, the government channels, including the Federal Housing Administration, the U.S. Department of Veterans Affairs, and the U.S. Department of Agriculture and Rural Development, have reached their highest credit risk level since 2012.

Over the past five quarters, the government channels have expanded their credit risk from 9.8 percent to 11.4 percent. However, the Urban Institute pointed out this remains well below the “pre-bubble level of 19-23 percent.”

The portfolio and private label securities channels continue to lag the progress made by the GSEs and the government channels, according to the report from the Urban Institute.

Prior to the housing crisis, the private market took on more product risk than the GSEs or the government channels. While all three channels reined their risk in significantly after the crisis, the private market has not yet loosened the reins like its counterparts have.

Product risk in the portfolio and private label securities market remains at a meager 0.2 percent as of the first quarter, and total risk stands at 2.2 percent, similar to the previous quarter.

“The private-label securities channel continued to stay close to or at the record low for the amount of default risk taken,” the Urban Institute stated.