It Just Got Tougher to Qualify for a Home Loan

And welcome back home buyers are facing a lot of headwinds right now the number one of course mortgage interest rates have been absolutely skyrocketing increasing by over 400 basis points in one single year or more than doubling over the past year that's number one of course but it just got harder to qualify for a Home Loan so I'm going to be sure in this report with you guys here in just a little bit but also because we're having

A decrease in home buying demand across the United States um home buyers right now are facing less competition amongst other home buyers when submitting offers so in today's article I'm going to share all the details with you guys so if you guys get a lot of value of today's article and of course, I post frequent healthy Market updates so you guys can

Be more informed and actually really enjoy making these articles as well anyways let's talk about this right here this is according to the Mortgage Bankers Association or the MBA they just announced this uh today actually this morning at the time this video which is October 11th here so they say here that a mortgage credit availability decrease in September and this is according to their mortgage credit availability index or their mcai so this is an index based

On lending standards for home lenders so it says here their index fell by 5.4 percent in September a decline in their index here indicates that lending standards are actually tightening in other words it becomes more challenging in order to get a home loan approved in contrast though when this index actually increases though this is indicative of loosening Credit, in other words, it gets easier to get a loan approved here so we're seeing lending standards actually

It Just Got Tougher to Qualify for a Home Loan

Tighten for the past seven months in a row now it says credit availability fell to its lowest levels since March of 2013 the seventh consecutive month of tightening in other words lending standards are very very strict the strictest they've been since March of 2013 and I'll share some graphs with you here in just a little bit to share how the availability of credit has changed over the past 10 years and also more importantly compared to 2014 to 2008

Compared to now which is pretty eye-opening uh stay tuned for that Joel Khan won the NBA's associate vice presidents state of the following year with the likelihood of a weakening economy which would lead to an increase of delinquencies of mortgage delinquencies there was a smaller appetite for lower credit score and high loan to value loan programs and he says here as merge rates have more than doubled over the past year that resulted

In a drop of refinancing activity if you guys follow the channel the number of people submitting applications for refi's has decreased by more than 80 percent compared to one year ago just because uh mortgage rates have been increasing so much so speaking of mortgage interest rates according to Investopedia today which again is the 11th average 30-year fix is at 7.32 percent that averages for people with exceptional credit across 

In the United States States so averages, of course, means you could get less than that or you can get a rate actually more than that depending on your lender and of course your uh credit worthiness like your FICO score, for example, uh also according to the Morrison's daily average rates right now at 7.14 this is a new 20-year High the highest rates we've had since 2002 which is absolutely insane because look at this one year ago rates was 3.17 percent and increased by

Almost four percentage points compared to one year ago or 397 basis points which is just mind-boggling so what lenders are doing right now is tightening their standards which they have done for seven consecutive months because they're anticipating a weaker economy and of course, for an increase of Mortgage delinquencies, in other words, they're hedging their bets right now and tightening their lending standards and lending to borrowers who have higher

Credit scores and they're getting rid of higher loan-to-value programs but take a look at this because here's insert index over the past 10 years or so so their Index right now is 102.5 look what happened Allen says pandemic in January more or less of 2020 their index absolutely fell off a cliff in other words they became very very tight in their lending standards because of the Fallout of our economy and of course estate home orders due to covid and

It Just Got Tougher to Qualify for a Home Loan

The levels we have right now are actually the lowest levels since 2013. so the levels we have right now are about a nine-year low which is indicative of tight lending standards also as you can see right here ever since really the fall and winter months of 2021 this has been decreasing greatly again down seven consecutive months but have a look at this because when you compare this to 2004 up until now it's very very eye-opening here because look at this

Here's the credit availability ever since uh 2004 which is right here so in 2004 really until 2005 let's just say 2005 2005 until 2000 and six-ish lending standards became very very loose back in the middle or the early parts of 2006-ish the index was just under 900 right now it's 102.5 so lending standards right now the lowest we've had since approximately 2013 and Far Below levels from 2004 all the way until 2007. I mean back in 2005 to 2007-ish you Could get a loan very very easily as long as you can breathe into a mirror and there's fog you get your loan approved that was back in during the day when you could get a no doc loan or an engine loan where you don't have to provide any support for the income that you're stating so you can say hey I make a hundred thousand dollars a year your lender would just say okay that's good enough for us and not ask for any documentation to support your claim they

Actually making a hundred thousand dollars per year was absolutely insane so the Lending Centers right now are far tighter compared to the Great Recession for example now don't get me wrong our current housing market has a lot of challenges number one, of course, would be in my opinion a lack of housing affordability because mortgage rates have been increasing so much and of course home prices are still very high a national level compared to a historical

Standards here so that's number one we're seeing a lot of challenges in our housing market due to housing affordability so despite the fact that lending standards are very very tight I'm not saying that our housing market is without its challenges so I'll make sure that you guys are aware of that let's talk about bidding wars according to Redfin here though because they have a really interesting article that was actually published at the end

Of September which actually missed but they really talk about how a lack of competition is seen across the United States more or less because home buying demand has been decreasing so that's kind of the Silver Lining right now even though it's cost more to buy a house right now because of rising rates and of course home prices at least a lot of home buyers right now are not facing a lot of competition amongst other home buyers when they're placing

An offer to buy a house right now so it says here Nationwide 44.6 percent of the home offers written by Redfin agents face competition the lowest bidding rate since the beginning of this pandemic when the housing market, of course, was ground to a halt this is down from 63.5 percent from one year ago so in one single year the rate of home buyer competition or bidding wars went from 63.5 percent to 44.6 percent this is also the seventh straight monthly

It Just Got Tougher to Qualify for a Home Loan

Decline so here's a chart showing the percentage of bidding wars ever since April 2020 which was when Redfin started tracking this data here and this is the monthly share of Redfin home offers that face competition by the way they Define that as when a Redfin agent reported that a receipt at least one competing bid so this August the share was 44.6 so the share of offers uh written by Redfin agents where they received at least one competing bid that

Represent about 44.6 of the time this is actually a typo here again uh Redfin I don't know what's going on anyways August 2021 the rate was 63.5 look at April 2020 because the share was only 33 now it's 44.6 so again this is kind of like the Silver Lining with home buyers right now even though rates are so high at least you don't have as much competition compared to one year ago down from 63.5 percent uh that we saw one year ago they also reported 

A typical home in a bidding war received 3.2 offers in August that's down from five one year ago it says here buyers are dropping out of this market and competition is dwindling largely because mortgage rates have more than doubled from one year ago reaching six percent uh in mid-September Redfin agents also reporting that prospective buyers are really backing out because of high monthly mortgage payments due to Sky High mortgage rates and some prospective

Buyers have also put off their housing market shirts altogether due to their thoughts regarding home values decreasing in the months ahead Redfin also noted that um San Antonio Texas Tampa Florida as well as Phoenix Arizona within metros with the lowest bidding war rates so approximately 21.7 percent of the home offers uh submitted by Redfin agents in San Antonio face competition in August the lowest share of the 36 metros in this analysis here now that Was followed by Tampa Bay or Tampa Florida with the second lowest bidding Moore rate at 23.8 percent those fought by Olympia Washington Phoenix Arizona as well as Minneapolis Minnesota in contrast though Philadelphia had the highest bidding more rate at 61.7 percent this is the highest rate in this analysis here again with 36 metros in this analysis here those followed by San Jose California at 58 percent Providence Rhode Island Boston Massachusetts and

Also, Detroit also provide each City and how they fared compared to last month as well as one year ago which I found to be really interesting here again San Antonio Texas had the lowest rate at 21.7 percent uh so approximately two very ten offers were written by Redfin agents face competition at least one other offer I compared that to one year ago look at this the rate was 60 percent so in one year they went from 60 percent now to only 22 percent so

It Just Got Tougher to Qualify for a Home Loan

If you're a home buyer looking for a house to buy in San Antonio Texas uh chances are you're not going to face a lot of competition in order to buy a house a much different compared to last year though in Tampa Florida one year ago it was 54 now it's 23. look at this Olympia Washington uh 61 now it's only 24 and the list goes on here pretty interesting here let's look at the lowest share they're actually the highest share I should say I filled Fiat 61.7 percent

Actually higher compared to one year ago at 60.2 percent so maybe the market there is still remaining very competitive given the fact that their bidding rate is very very high uh San Jose California that's 58 but last year was 72.3 percent Province Rhode Island at 55 60 last year uh let's take a look at anything else here it's worth noting San Francisco 52.5 percent one year ago it was 70 percent though and in Sacramento where I live and work as a

Real estate agent uh the rate right now is 45.5 percent actually up from July's rate at 32.9 percent but far below last year's levels at 65.5 percent I can say in Sacramento one year ago our housing market was absolutely insane it was so challenging to get an offer accepted with the uh with a home buyer here in the greater Sacramento area it wasn't uncommon for home sellers to get over eight offers for a property I had a house that I've written off before where

The home seller received about 15 offers there was actually a house here in Citrus Heights which is about a 15-minute drive from Sacramento and the home seller there received 123 offers on one single house which is mind-blowing that actually made national news in any case I digress here other cities I want to mention here is Miami Florida which has been a market where it hasn't slowed down as much compared to other markets so the bidding more rate is 42.2 percent

Uh one year ago it was 57 Dallas Texas is 42 percent one year ago 65.6 percent look at Nashville 40 and now it's 60 percent Riverside California as well it was 67 one year ago now it's only 40 and I'll scroll down here in case you guys want a screenshot and take a look at these other cities here also want to share the uh cities that had the highest rates uh one year ago so I thought it'd be an interesting look at that Raleigh North Carolina what a difference

That is wow so Raleigh North Carolina 79 in August of 2000 2021 now it's only 35 percent if anyone lives in Raleigh North Carolina let me know what's going on there maybe I should make a separate article regarding that because this is pretty eye-opening uh 79 now to 35 percent uh San Jose we already talked about that uh Los Angeles 70 now it's only 50 percent look at Charlotte 70 or 69 now it's only 31 uh pretty eye-opening here San Diego also very

High last year at 68 and also Detroit at 68.1 percent pretty high pointing stuff I hope you guys got a lot of value out of today's article of course if you did please like the button and Chris appreciate that hope you guys have an awesome day and look forward to seeing you on the next article.