Tight Lending Blocks Some Would-Be Buyers

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Real Estate

Not everyone is able to take advantage of all-time-low mortgage rates. Available housing credit has reached its lowest level since February 2014, Bloomberg News reports.

In January 2019, 44% of Ginne Mae’s purchase loans were granted to borrowers who had FICO scores below 700 and debt-to-income ratios of more than 40%. However, a year later, Ginnie Mae granted just 38% of borrowers loans with FICO scores below 700. And in August, that dropped to 36%, according to data from the Urban Institute. Ginnie Mae guarantees loans that are popular with first-time home buyers and lower-income borrowers. 

Overall, an index of housing credit produced by the Mortgage Bankers Association shows that the availability of loans has dropped eight out of nine months so far this year. MBA’s index has fallen 35% year over year.

On the other hand, borrowers with good credit are getting the lowest mortgage rates ever, making their home purchases even more affordable. Freddie Mac reported last week that the 30-year fixed-rate mortgage averaged an all-time low of 2.81%, the 10th record low for mortgage rates.