Improving us mortgage affordability stalls

Photo credit: Cyndie

The improving affordability of mortgages has stalled in the US, according to new research by Zillow. For the past two years, financing has opened up to borrowers in America, as the economy and market continues its steady recovery from the financial crash.

For 18 straight months beginning in early 2013 and continuing into late 2014, ZMAI grew at a "remarkably steady pace", says the site's latest report, rising 58 per cent from the low-point recorded in 2010.

Now, though, affordability is beginning to stall: the Zillow Mortgage Access Index (ZMAI) ended Q1 2015 at 65, down from Q4 2014’s reading of 67.7 (which itself was down from 69.6 in Q3 2014). (A reading of 100 equals conditions recorded in January 2002.)

The figures arrive as the Mortgage Bankers Association report a decline in the number of applications received: applications decreased 6.2 per cent from one week earlier on 4th September, according to the MBA.

Nonetheless, applications were 41 per cent higher than the same week a year ago - a rise partially due to the shift in Labor Day from the first week in September to the second week in 2015. Affordability, though, has still improved since last summer, even though the industry has begun to tighten conditions in recent months.

Zillow argues this is the new normal for the mortgage market in the US: "Credit is much looser now than it was in the wake of the housing collapse, but stricter than during the bubble years. The days of rapid credit access improvement may be behind us, but despite the recent stall, it remains a good time to buy for those who can find an on-budget home and qualify for a loan. Conventional mortgage rates remain stubbornly low, and buying a home with conventional mortgage financing remains a bargain compared to renting."