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Search A A A REAL ESTATE RESEARCH ABOUT March 25, 2015 REAL ESTATE RESEARCH SEARCH Real Estate Research provided analysis of topical research and current issues in the fields of housing and real estate economics. Authors for the blog included the Atlanta Fed's Jessica Dill, Kristopher Gerardi, Carl Hudson, and analysts, as well as the Where Is the Credit Availability Pendulum Now? (Part 2 of 2) Search RECENT POSTS In our previous post, we considered survey-based and index measures of mortgage credit availability. We concluded that availability has slowly but steadily been improving since early 2013. In this post, we focus on borrower Assessing the Size and Spread of Vulnerable Renter Households in characteristics for originated mortgages. We think of availability of credit as the willingness of lenders to lend while borrower characteristics shape the quantity of the Southeast What's Being Done to Help Renters In December 2020, content from Real Estate Research became part of purchasers that are qualified to buy. By turning to mortgage origination data, we can look at the “credit box” and track changes (that is, expansions and during the Pandemic? An Update on Forbearance Trends Policy Hub. Future articles will be released in Policy Hub: Macroblog. contractions) in the credit box over time. We do this acknowledging that this approach fails to capture variation in loans that have been declined and allows Examining the Effects of COVID-19 on the Southeast Housing Market us only to observe variation in loans that have been originated. Southeast Housing Market and COVID-19 Looking at trends in credit characteristics of purchase mortgages originations, we find data that support the idea that the credit box, which tightened during the Update on Lot Availability and Construction Lending Great Recession, has not gotten looser. For one, the distribution of FICO scores on conventional mortgages shifted during the housing downturn to a distribution Tax Reform's Effect on Low-Income Housing dominated by borrowers with higher credit scores—those above 680—and has yet to show much movement in the other direction. Housing Headwinds Where Is the Housing Sector Boston Fed's Christopher Foote and Paul Willen. Disclaimer Email Me Subscribe by E-mail Subscribe by RSS Other Fed Websites Comment Standards: Comments are moderated and will not appear until the moderator has approved them. Headed? Did Harvey Influence the Housing Market? Please submit appropriate comments. Inappropriate comments include content that is abusive, harassing, or threatening; obscene, vulgar, or profane; an attack of a personal nature; or overtly political. CATEGORIES Affordable housing goals Credit conditions Expansion of mortgage credit Federal Housing Authority Financial crisis In addition, no off-topic remarks or spam is permitted. Foreclosure contagion Foreclosure laws Governmentsponsored enterprises GSE Homebuyer tax credit Homeownership House price indexes Household formations Housing boom Housing crisis Housing demand Housing prices Income segregation Individual Development Account Loan modifications Monetary policy Mortgage crisis Mortgage default Yet credit scores represent just one dimension of a multidimensional credit box. To paint a fuller picture, consider loan-to-value (LTV) ratios before and after the housing downturn. The table shows summary statistics of this data. Comparing the distributions of LTV ratios of mortgages originated in 2006 and 2014, it seems somewhat counterintuitive that the share of conventional mortgages with high LTVs was greater in 2014 (35.3 percent) than in 2006 (21.2 percent). Mortgage interest tax deduction Mortgage supply Multifamily housing Negative equity Positive demand shock Positive externalities Rental homes Securitization Subprime MBS Subprime mortgages Supply elasticity Uncategorized Upward mobility Urban growth Layering the distribution of FICO scores on the distribution of LTVs helps to explain away some of this peculiarity. A sizable share of the 2006 loans that were originated with an LTV greater than 80 percent fell on the lower end of the credit score spectrum. In contrast, most of the loans originated in 2014 with LTVs greater than 80 percent fell on the higher end of the credit score distribution. One thing that is not in our data set is the extent to which these mortgages had piggyback mortgages. Data provided by Inside Mortgage Finance indicates that second-mortgage originations decreased from $430 billion in 2006 to $59 billion in 2013 (the most recent year for which data are available). That is, seconds shrank from 14 percent of total originations to just 3 percent of total originations. So it is possible that the share of conventional mortgages with an LTV greater than 80 percent is understated—especially in 2006. So what are the takeaways? Clearly, there has been a shift in conventional mortgage originations towards borrowers with better credit records. Also, we have to be careful in interpreting the trend in LTV ratios when information on second and third liens is not available. Finally, while survey-based and index measures of availability of credit may be improving, evidence from borrower characteristics of originated mortgages tells a less compelling story and suggests the pendulum still has some distance to go before we can consider it in the loosening range. By Carl Hudson, director for the Center for Real Estate Analytics in the Atlanta Fed´s research department, and Jessica Dill, senior economic research analyst in the Atlanta Fed's research department March 25, 2015 in Credit conditions | Permalink Frequently Asked Questions Careers GDPNow Inflation Project Jobs Calculator Contact Us A to Z index Follow the Fed Market Probability Tracker Speakers Bureau Teacher Workshops Publications Disclaimer & Terms of Use Online Privacy Policy Wage Growth Tracker Data Privacy Policy 1000 Peachtree Street N.E. Atlanta, Georgia 30309 404-498-8500 Home Careers
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