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Mortgage credit still in a post-crisis funk? The data begs to differ

“There are loans for almost every borrower in the marketplace if they want one,” said Christy Bunce, the chief operating officer at New American Funding, a lender based in Tustin, Calif.

Although credit definitely tightened in the immediate aftermath of the crisis, several data points show it has loosened considerably in the years since, and lenders on the ground portray a mortgage credit market with a diverse array of products for borrowers of varying financial backgrounds.

New regulations, such as underwriting requirements established by the Consumer Financial Protection Bureau, have probably made it harder to lend to borrowers with poor credit, but not impossible. And analysts say that while the affordability gap has gotten worse, that may be due to skyrocketing home prices more than anything else.

Data points to mortgage credit availability having taken a huge leap since 2012, in part because of access to low-down payment loans.

“If you look from 2012 to today, credit has gotten looser, particularly with respect to greater availability of low-down payment loans,” said Mike Fratantoni, chief economist and a senior vice president at the Mortgage Bankers Association.

Market shift drives credit availability decline in Q2

HFPC said a shift in market composition primarily drove the overall decline. During the second quarter, the government channel lost market share to the portfolio channel, which has much tighter lending standards. Meanwhile, higher interest rates and lower refinance volumes allowed the government and portfolio channels to expand credit.

The second quarter also saw mortgage credit availability in the government-sponsored enterprise channel stay high after reaching its highest level in the second quarter since its low in 2011. The government channel reached its highest level since 2009 after increasing for four consecutive quarters. The private-label securities channel continued to stay close to or at the record low for the amount of default risk taken.

HFPC also said that there remains significant space to safely expand the credit box. 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.

Can someone please explain the correlation between credit/mortgage fears and the stock market?

"Major gauges tumble on credit and mortgage market fears; Dow, Nasdaq, S&P 500 all down 10 percent off highs - reaching market correction levels."

This was the headline on CNN.


I work for one of the largest (still standing) mortgage banks in the county. I've been in and out of the industry for 10 years. I got out in the last crash in 1998. By the looks of things, it's a lot worse than it was 10 years ago.