Real Estate News

Report: More mortgage denials than there may appear

Published: 15 Feb 2017

Potential buyers still face barriers to taking out mortgages, according to an announcement from the Urban Institute. The source used data from 2014 and 2015 to compare actual mortgage denial rates with the way these denials are perceived. Added to previous figures, this information paints a larger picture of buyer activity since 1998.

In all cases, the real rate of denials has been far higher than the one seen from the outside. Even when the gap between the two measurements was at its smallest, between 2004 and 2007, the actual denial rate was still around ten percent higher than the perceived one. This information came from multiple sources, including not just the Urban Institute itself but CoreLogic, eMBS and the Home Mortgage Disclosure Act.

The UI argued that lower-credit buyers have faced difficult barriers to mortgage purchases in recent years, and that the more prevalent ways of measuring mortgage denial rates in general have been insufficient. This, according to the source, means that the lack of lower-credit mortgage applicants has gone underappreciated.

Mortgage rates in 2017 have made many shifts up and down in recent days. Other actions have influenced the mortgage market in the wake of the recent inauguration. The Washington Post reported that an early executive order from President Trump canceled out a mortgage rate decrease left over from the Obama Administration. The Federal Housing Administration's mortgages were set to decrease by .25 points, but the new reversal reportedly followed previous Republican opposition to the move.

Last year, Credit.com reported that 30 percent of Americans have credit scores in the "poor" or "bad" ranges, based on 2015 data from Experian. Using the firm's VantageScore 3.0 system, this meant that these consumers had credit scores below 600.