A lot of things are scarce now-a-days. While toilet paper scarcity is hopefully a thing of the past, housing inventory remains a real problem and mortgage credit availability, a measure of a lender’s willingness to issue mortgages, is near its lowest level since 2014, according to the MBA (Mortgage Banker’s Association).
While the number of loans made is reaching new heights, those loans are being made to borrowers with stellar credit. According to the WSJ, borrowers who would have qualified for a home mortgage in the first quarter of 2020 are now out of luck, deemed too much a credit risk. Hence, about 70% of mortgages issued in 2020 went to borrowers with credit scores of 760 or higher; this is up from 61% in 2019, according to the Federal Reserve Bank. Furthermore, the rapid increase in in home prices has made some lenders reluctant to take on first time home buyers and others who they view as slightly risky.
But, it is not all bad news! While we are starting to see interest rates bump up a bit, that increase remains historically low and may in fact work to your benefit. According to Mike Fratantoni, the MBA’s Chief Economist, credit requirements should loosen slightly this year as interest rates rise. “Since lenders aren’t being flooded with calls to refinance, more of their resources can be used to reach out to first time buyers for purchases,” Mr. Fratantoni said.
Along the same lines, as real estate agents have less inventory to show, they will have more time to counsel clients on navigating the the process of successfully getting financing to purchase a home. More than ever before, establishing a team of real estate professionals before you even see your first property is going to be key.