There was an increase in the availability of mortgage credit in the third quarter of 2017 the Urban Institute says
There was an increase in the availability of mortgage credit in the third quarter of 2017 the Urban Institute says.
Its Housing Finance Policy Center’s credit availability index (HCAI) was up to 5.6% in Q3, 2017 compared to 5.1% in the previous three months. This was the highest level since 2013.
The higher figure means lenders were more likely to tolerate defaults and take risks on mortgage lending.
Credit expansions in the government-sponsored enterprises Fannie Mae and Freddie Mac, and government channels including FHA and VA, drove the rise in available credit as interest rates rose and refinance volumes moderated.
There was an 86% increase in total risk taken by the GSE channel between Q2, 2011 and Q3, 2017, rising to 2.5%.
The government channel increased its total default risk to 11.1% during the first three quarters of 2017, but this remains half the pre-bubble level.
Portfolio and private-label securities channels continued to stay at or near record lows for product risk at 0.2% in Q3, 2017 with the default risk in this market remaining low at 2.2%.
Room for expansion
Significant space remains to safely expand the credit box, the Urban Institute says.
“If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5% from 2001 to 2003 for the whole mortgage market,” the organization’s report highlights.
Its Housing Finance Policy Center’s credit availability index (HCAI) was up to 5.6% in Q3, 2017 compared to 5.1% in the previous three months. This was the highest level since 2013.
The higher figure means lenders were more likely to tolerate defaults and take risks on mortgage lending.
Credit expansions in the government-sponsored enterprises Fannie Mae and Freddie Mac, and government channels including FHA and VA, drove the rise in available credit as interest rates rose and refinance volumes moderated.
There was an 86% increase in total risk taken by the GSE channel between Q2, 2011 and Q3, 2017, rising to 2.5%.
The government channel increased its total default risk to 11.1% during the first three quarters of 2017, but this remains half the pre-bubble level.
Portfolio and private-label securities channels continued to stay at or near record lows for product risk at 0.2% in Q3, 2017 with the default risk in this market remaining low at 2.2%.
Room for expansion
Significant space remains to safely expand the credit box, the Urban Institute says.
“If the current default risk was doubled across all channels, risk would still be well within the pre-crisis standard of 12.5% from 2001 to 2003 for the whole mortgage market,” the organization’s report highlights.
