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Mortgage landscape continues to shift

July 19, 2017

There are many moving parts in the mortgage industry that can have an effect on activity, ranging from lenders' standards for who can obtain credit to factors such as home prices, housing inventory, mortgage rates and more. To that end, it's not always easy to predict how the market as a whole will move, especially when considering how volatile certain aspects of that market seem to be these days.

"Lenders continue to keep a relatively tight lid on credit access."

For instance, lenders continue to keep a relatively tight lid on credit access even as the median consumer credit score for a new home purchase loan has risen 23 points - to a reading of 729 - since the recession began, according to the latest Housing Finance at a Glance report from the Urban Institute. In addition, the 10th-percentile borrowers who get approved now have credit scores of about 645, up from roughly 600 a decade ago.

All this comes at a time when owner credit risk is extremely low in comparison with pre-recession norms, and has been for some time, the report said. In fact, today's current risk is well below the "reasonable lending standards," as defined by the Urban Institute, seen in the early 2000s before the housing bubble started to swell out of control.

Problematic for first-timers?
The market may be particularly troublesome for young adults who have never owned a home before, not only because of the ways in which lenders restrict access to credit overall, but also because lower-priced "starter homes" are coming off the market almost as quickly as they're being made available, thanks to high demand. Based on a number of factors, some of the least-affordable major cities first-timers can reasonably buy are mostly in coastal population centers, according to WalletHub. These include San Francisco and Oakland in California's Bay Area, New York City, Los Angeles, Miami and more.

Meanwhile, the most affordable major cities for first-time buyers tend to be more inland: Raleigh, North Carolina; Lexington, Kentucky; and Colorado Springs, Colorado made up the top-three in this regard. Moreover, for those looking to move to smaller cities, it seems that Texas was the place to go, with McKinney ranking first among mid-sized cities. Frisco, Allen, and Richardson ranked first, second, and fourth, respectively, among small urban markets.

"Rates have been on a roller coaster."

Rates are up and down
Potentially also adding to the confusion about when it the best time to buy, mortgage rates have been on a bit of a small-scale roller coaster over the past few weeks, according to Bankrate. Most recently, they ticked slightly downward, falling to an average of 3.88 percent for 30-year fixed-rate mortgages in the week ending July 18, from the previous 3.92 percent. Likewise, rates for 15-year FRMs slumped to 3.06 percent from the previous 3.16 percent.

With these issues in mind, it's vital for any would-be buyers to make sure they're examining all available options when attempting to enter the market as a little research can go a long way toward helping them find the best possible deals.

 

 

 

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