Mortgage credit availability has reached near its lowest level since 2014, adding another hurdle for prospective buyers on top of low inventory and rising home prices. While there are a large number of home loans handed out, borrowers without prime credit histories and large down payments are excluded. Realtor.com says borrowers with credit qualifications outside of the stellar category are finding fewer lenders willing to approve their applications. In 2020, 70% of issued mortgages were given to those with credit scores of at least 760. This is a 9% increase from 2019. The median credit score for borrowers was 786 during the fourth quarter of 2020.
Americans who want to break into the housing market this spring face plenty of other challenges. Home prices tend to fall in a slowing economy, but they have jumped during the coronavirus pandemic, keeping many families out of homeownership.
Home prices are increasing at the fastest pace in 15 years, propelled by a record-low supply of homes for sale and a flood of well-off workers looking for second homes or space for home offices. The median existing-home price topped $300,000 last summer and has stayed there ever since.
And mortgage rates, while still historically low, have risen meaningfully from last year’s record-setting lows, pushing monthly payments higher for would-be buyers.
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