Although there’s no question that when the housing bubble burst it had the effect of both lowering the value of houses and restricting access to credit, there have been huge inroads made in restoring both the market and the ability for people to obtain mortgages. Despite significant gains, the perception of many is that the housing market is still in a slump and that home loans are only being given to a select few. The results of the Zillow Mortgage Access Index show that things are not only looking up but approaching pre-crisis levels.
In August of 2004, credit was easiest to obtain, but by mid-2007, credit access was the most restricted it has been in recent history. However, thanks to slow but steady progress, access is at two-thirds of the level of 2002, a year that represents pre-crisis levels. According to Zillow chief economist, Stan Humphries, this is a good place to be in as it allows individuals with lower credit scores to obtain home loans without loosening restrictions too much.
One major indicator of the progress that has been made is that people with lower credit scores, in particular, those with scores below 700, are able to get mortgages with private mortgage insurance. Just last year, many of these individuals would only have been able to obtain credit from FHA loans, but they are now being given access to mortgages with more competitive terms and rates. Since first-time buyers tend to have lower credit scores and less access to credit, this is allowing a number of people into the housing market.