Zillow: Getting a Mortgage No Easier Than Year Ago

Access to mortgage credit tightened in the first quarter, reported Zillow Inc., Seattle.  

The company’s Mortgage Access Index noted while consumers have found obtaining a mortgage “progressively easier” since 2012, first several months of this year marked a pause in easing access to mortgage credit.  

Zillow Chief Economist Svenja Gudell said mortgage credit availability was almost unchanged from a year ago, meaning despite fluctuations from quarter-to-quarter, “there has been little progress toward making mortgages easier to obtain over the last year. In the long-term, experts expect mortgage access to continue improving.”  

From a historical standpoint, mortgage credit was easiest to obtain in July 2004, when the Index reached 136.4. But availability tightened over the next few years. In May 2007, both the housing and mortgage availability began a multi-year plunge, leaving home values down more than 22 percent and credit the tightest in recent history. Mortgages were the toughest to obtain in September 2010, when the Index fell to 11.8. In the first quarter, access to mortgage credit stood at 65, more than two-thirds of the way back to 2002 pre-crisis levels. A high number in the Zillow Mortgage Access Index means credit is easier to obtain, while a lower number means credit is tighter.  

“Recent market volatility is causing some lenders to be more cautious in their underwriting,” Gudell said. “Tighter mortgage access will make it harder for people with low credit scores to get a home loan, and even people who can get approved for a mortgage will have fewer options in terms of available mortgage products.”   

The Index uses seven variables to measure access to credit. Of those variables, the bottom 10th percentile of credit scores accepted, the prevalence of second mortgages and the number of quotes on Zillow offered to mortgage inquirers saw the greatest positive movement in the six most recent months of the Index.  

The Mortgage Bankers Association will release its monthly Mortgage Credit Availability Index this Thursday, Sept. 3.