A recent Fannie Mae survey has reported that a majority of home buyers believe it is easier now to obtain a mortgage than previous years. If
consumer confidence is any indicator (which it is), this result suggests that mortgage availability is finally starting to improve.
The Mortgage Bankers Association believes that consumers are correct about the increased availability of credit in the mortgage industry. They also report that the availability of credit in the mortgage industry has increased primarily in markets for jumbo loans and refinance loans. The MBA?s chief economist, Mike Fratatoni, believes that much of this growth has been spurred by lenders who are using new qualified mortgage regulations to offer jumbo loans and refinance loans that offer better terms for consumers.
However, other economists who study the mortgage industry closely believe that a reduction in the number of mortgage defaults and delinquencies is also playing a key role in the expansion of credit in the mortgage industry. Encouraging increases in home sales and home values have allowed many homeowners who were on the brink of defaulting on their mortgages to trade their more expensive home for something more affordable.
Many economists believe these trends should give the mortgage industry the confidence needed to expand mortgage availability during the next 12 months. This assertion makes sense, as most mortgage industry analysts believe the majority of the toxic loans that were the cause of the 2008 credit crisis have finally been removed from most lenders? asset sheets.
Many economists and mortgage industry analysts believe lenders will use these trends and statistics as a signal to continue to expand mortgage availability programs to take advantage of low interest rates, encouraging job growth trends and tight home inventories. As a result, don’t be surprised to see more consumers take out more mortgages in 2014 to purchase homes!