There was an improved availability of mortgage credit in the fourth quarter of 2017, the second consecutive rise.
The Urban Institute’s Housing Finance Policy Center’s credit availability risk rose to 5.8% (from 5.6% in the third quarter) to become the highest reading since 2013. Higher numbers mean lenders are more willing to take risks and is based on a measure of default risk.
The increase was mostly due to increased credit availability through the government-sponsored enterprise (GSE) and government channels, thanks to higher interest rates and lower refinance volumes.
Freddie Mac and Fannie Mae – the GSEs – had the highest levels of mortgage credit availability since 2011; while the FVR channel which includes the FHA and VA programs, reached its highest level since 2012.
The report from the Housing Finance Policy Center highlights that there is still room to “safely expand the credit box.” It says that the current default risk could double across all channels and still be well within the pre-crisis standard of 12.5% from 2001-2003 across the whole mortgage market.
The next mortgage credit availability index will be published on July 12, 2018.
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