No Bubble Here How New Mortgage Standards Are Helping

Dated: 12/13/2018

Views: 91

 

No Bubble Here! How New Mortgage Standards Are Helping

No Bubble Here! How New Mortgage Standards Are Helping | MyKCM

Real estate is shifting to a more normal market; the days of national home appreciation topping 6% annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008.

As it becomes easier for buyers to obtain mortgages, many are suggesting that this is definite proof that banks are repeating 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):

No Bubble Here! How New Mortgage Standards Are Helping | MyKCM

Bottom Line

Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.


Blog author image

Danny Crow

As a real estate agent since 2000, I enjoy helping others discover Central Texas and make a home here. Real estate in Austin offers many options to home buyers and I will make sure you explore every o....

Want to Advertise on this Site?

Latest Blog Posts

Neighborhood Amenities To Look Into Before Purchasing A Home By Kurtis Forster

If you're on the hunt for a new home, you need to be doing your homework. Research before buying a new home is absolutely crucial to ensure you're making the right choice. After all, you

Read More

Mar 14 2019 13081 1

Sell Your Home with These Low-Cost Improvement IdeasBy Suzie Wilson It’s a sellers’ market but that doesn’t mean you don’t have to put some effort into your real estate listing. With

Read More

Whats Going On With Bidding Wars

What’s Going On with Bidding Wars?In a strong seller’s market, like the one we have experienced over the past few years, bidding wars are common and expected. This makes sense! A

Read More