Trends in Mortgage Credit Availability: The Evidence and Its Implications

Abstract

Mortgage credit availability is tracked closely by policymakers and industry participants alike, as it is a critical measure of the health of the market. Market analysts should be aware of the strengths and weaknesses of single- and multivariable measures and should also recognize that changes in credit pricing can have as much impact as changes in credit criteria. As analysts evaluate the market, they must ask what leads to differences in the quantity and quality of closed loans observed in transaction data: changes in supply, or changes in demand? The different measures of credit availability discussed here tell a relatively consistent story of the recent trend of improving credit availability, and such measures show that today’s mortgage market is largely devoid of the product and documentation risks prevalent during the boom.