The real estate market is returning to more normal levels. Gone are the days of nationwide home appreciation hitting an annual rate of over 6 percent. More homes are becoming available, which means inventories are on the rise, and bidding wars are starting to decline. Because of this, some predict that the housing market is heading toward a 2008-like crash.
These days, it’s also easier for homebuyers to get a mortgage, adding to the argument that banks could be repeating their former mistakes. Today, it’s important for homebuyers to understand that the figures show we’re not on our way to another housing “bubble and bust.”
MCAI numbers highlight why today’s buyers don’t need to worry about a crash
The Mortgage Bankers’ Association (MBA) releases monthly measurements that reflect mortgage credit availability, also called the Mortgage Credit Availability Index (MCAI). The MBA says:
“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 a measurement is, the easier it’ll be for a homebuyer to get a mortgage. Coming up to the housing bubble of 10 years ago, this measurement was close to 400. Then the measurement reached over 800, more than doubling in 2005 and 2006. The measurement dropped slightly to nearly 600 in 2007. When the housing market crashed in 2008, the MCAI plummeted to right over 100.
As credit started to ease within the past decade, the index rose to its current point of 182.1. This measurement is still half of the number it was over a decade ago, before the bubble buildup. It’s also less than a quarter of the measurement seen in the last housing bubble leading to the crash.
There’s a better way to mortgage — and it’s fast, friendly, and super-safe.
Over the past few years, mortgage standards have relaxed somewhat. But we’re still not anywhere near the loose lending standards seen 10 years ago that helped feed into the crisis. Buying now in a more stable market gives new homebuyers the opportunity to purchase an affordable home and start building equity as housing prices increase.
When you’ve got 99 problems, but a down payment isn’t one
There are no signs of a housing bubble, and if you’re ready to stop renting (or ready to trade up from your starter home into a bigger space), this is the year to act. Using a low-down-payment loan like the FHA mortgage can help take the pressure off of buying. FHA loans have first-time-buyer-friendly perks, like the fact that down payments can be gifted. Click here to find out if an FHA is the right fit or to pick from plenty of other mortgage programs that could make your monthly payment cheaper.
*Please visit here for more methodology, FAQs, and resources related to the MCAI.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources are deemed reliable but not guaranteed.