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    How Are New Mortgage Standards Helping

    Mortgage Bubble? - DeBonis Team
    The real estate market has shifted to a more traditional market; the times of national home appreciation topping 6% annually have subsided and inventory is increasing at a slow pace, which is causing bidding wars to decrease. Some are saying that these as signs that the real estate market will soon come tumbling down the way it did in 2008.

    It has become easier for buyers to obtain mortgages, so many are suggesting that this is clearly proof that banks are making the same mistakes they made a decade ago. Today, we want to assure everyone that we are not heading to another housing “bubble & bust.”

    Each month, the Mortgage Bankers’ Association (MBA) releases a measurement which indicates the availability of mortgage credit known as the Mortgage Credit Availability Index(MCAI). According to the MBA:

    “The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).” *

    The higher the measurement, the easier it is to get a mortgage. During the buildup to the last housing bubble, the measurement sat at around 400. In 2005 and 2006, the measurement more than doubled to over 800 and was still at almost 600 in 2007. When the market crashed in 2008, the index fell to just over 100.

    Over the last decade, as credit began to ease, the index increased to where it is today at 186.7 – still less than half of what it was prior to the buildup of last decade and less than one-quarter of where it was during the bubble.

    Here is a graph depicting this information (remember, the higher the index, the easier it was to get a mortgage):

    Historic Mortgage Data - DeBonis Team

    Bottom Line

    Clearly mortgage standards have loosened somewhat in recent years, we are not even near the standards that created the housing crisis ten years ago.

    *For more information on the MCAI, including methodology, FAQs, and other helpful resources, please click here.

    Are you are thinking of Buying, Selling or Investing in Real Estate? Do you need more information on the ever changing mortgage guidelines? The DeBonis Team can help you! Contact Us, for a Free Consultation.


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