No Bubble Here! How New Mortgage Standards Are Helping

Real estate is shifting to a more normal market; the days of national home appreciation topping 6% annually are over and inventories are increasing which is causing bidding wars to almost disappear. Some see these as signs that the market will soon come tumbling down as it did in 2008.

As it becomes easier for buyers to obtain mortgages, many are suggesting that this is definite proof that banks are repeating the same mistakes they made a decade ago. Today, we want to assure everyone that we are not heading to another housing “bubble & bust.”

Each month, the Mortgage Bankers’ Association (MBA) releases a measurement which indicates the availability of mortgage credit known as the Mortgage Credit Availability Index (MCAI). According to the MBA:

“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 the measurement, the easier it is to get a mortgage. During the buildup to the last housing bubble, the measurement sat at around 400. In 2005 and 2006, the measurement more than doubled to over 800 and was still at almost 600 in 2007. When the market crashed in 2008, the index fell to just over 100.

Over the last decade, as credit began to ease, the index increased to where it is today at 186.7 – still less than half of what it was prior to the buildup of last decade and less than one-quarter of where it was during the bubble.

Here is a graph depicting this information (remember, the higher the index, the easier it was to get a mortgage):

No Bubble Here! How New Mortgage Standards Are Helping | MyKCM

Bottom Line

Though mortgage standards have loosened somewhat during the last few years, we are nowhere near the standards that helped create the housing crisis ten years ago.

*For more information on the MCAI, including methodology, FAQs, and other helpful resources, please click here.

WRITTEN BY:

Exceptional Negotiator – No one fights harder for You! The best tools, exceptional marketing, & personal service, to achieve the best results for you. I am a pleaser! I am at my best when I am helping others. I started off early in life working on houses, from simple electrical issues to small patch jobs. Over the years I have built a number of homes, stick to ICF (Insulated Concrete Block), installed rocks walls, patios, decks, ponds with water falls, and underground irrigation systems. Figuring out how to fix or make something better is a challenge I welcome. For the last 25+ years I have owned a few large format printing companies, an outdoor advertising company, and a property management company. Today I am CAM (Community Association Management) certified, allowing me to manage Condominiums Associations and Home Owners Associations. I use the Matterport 3D Virtual Reality camera system – allowing me to capture your property and bring the full “Walk Through” experience of your property to the on-line world. I also use the industries best Drone systems, and I am Federal Drone Commercial Certified – allows me to fly a Drone and film your property from up to 400′ in the air. Please go to the 3DSellsMore tab for more details on the Matterport and the Drone Services.

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