This is Not 2008 All Over Again: The Mortgage Lending Factor

This is Not 2008 All Over Again: The Mortgage Lending Factor | Simplifying The Market

Some are afraid the real estate market may be looking a lot like it did prior to the housing crash in 2008. One of the factors they’re pointing at is the availability of mortgage money.

Recent articles about the availability of low-down payment loans and down payment assistance programs are causing concern that we’re returning to the bad habits of a decade ago. Let’s alleviate the fears about the current mortgage market.

The Mortgage Bankers’ Association releases an index several times a year titled: The Mortgage Credit Availability Index (MCAI). According to their website:

“The MCAI provides the only standardized quantitative index that is solely focused on mortgage credit. The MCAI is…a summary measure which indicates the availability of mortgage credit at a point in time.”

Basically, the index determines how easy it is to get a mortgage. The higher the index, the more available the mortgage credit.

Here is a graph of the MCAI dating back to 2004, when the data first became available:This is Not 2008 All Over Again: The Mortgage Lending Factor | Simplifying The Market As we can see, the index stood at about 400 in 2004. Mortgage credit became more available as the housing market heated up, and then the index passed 850 in 2006. When the real estate market crashed, so did the MCAI (to below 100), as mortgage money became almost impossible to secure.

Thankfully, lending standards have eased since. The index, however, is still below 200, which is half of what it was before things got out of control.

Bottom Line

It is easier to get a mortgage today than it was immediately after the market crash, but it is still difficult. The difference in 2006? At that time, it was difficult not to get a mortgage.

Content previously posted on Keeping Current Matters

About the Author
Richard Wamsat is an author, a deep thinker, and master of home sales. He lives in Irvine, California with his wife Brandy and a fluffy white dog named Murphy. His knowledge of real estate spans two decades having purchased his first home at the age of 19. He has worked in both Northern California and Southern California markets and has fought with banks to save client's homes or get relief from underwater mortgages during the Great Recession. Richard is a licensed real estate agent with Coldwell Banker Residential Brokerage - CalRE#01345167. He has earned the designation of Master Certified Negotiation Expert from The Real Estate Negotiation Institute, a member of the Harvard Program on Negotiation. Connect with Richard on Twitter @rwamsat, or on his website https://ocluxehomes.com