- Access to mortgages has been unchanged spanning the past year.
- Even people who get approved will have fewer options in terms of mortgage products.
- Those with low credit scores will have difficulty obtaining a mortgage moving forward.
Since 2012 it had been getting progressively easier to obtain a mortgage — that is, until the first quarter of 2015.
According to Zillow’s Mortgage Access Index, access to mortgage credit tightened in the quarter reaching a score of 65 — nearly unchanged from a year ago.
Mortgage credit was easiest to obtain in July 2004, when the ZMAI would have reached 136.4. Mortgages were toughest to obtain in September 2010, with a score of 11.8.
“Recent market volatility is causing some lenders to be more cautious in their underwriting,” said Dr. Svenja Gudell, chief economist for Zillow, in a statement.
Gudell pointed out that tighter mortgage access should make it harder for people with low credit scores to get a home loan.
“Even people who can get approved for a mortgage will have fewer options in terms of available mortgage products,” he added.
Despite fluctuations from quarter to quarter, there has been little progress toward making mortgages easier to obtain over the last year, Zillow noted.
In a survey earlier this summer of more than 100 economists and housing experts, more than 60 percent said they expect mortgage regulations to loosen further, according to Zillow. Additionally, many expressed concern that the market will become too lax over the next year.
To determine the mortgage accessibility score for a quarter, Zillow examines seven variables. These variables saw the greatest positive movement in the last six months: the bottom 10th percentile of credit scores accepted; the prevalence of second mortgages; and the number of quotes on Zillow offered to mortgage inquirers.
Other variables considered include: the 90th percentile of borrower debt-to-income; the proportion of low down payment loans that are privately insured; the percentage of loans that are nonconforming and have down payments higher than 20 percent; and the spread between 30-year fixed mortgage rates and 10-year Treasury rates.