Will Getting a Mortgage Be Easier in 2013?

By Kali Geldis

The decision to make the jump from renter to homeowner is not an easy one, but a lack of credit availability has been keeping many potential homeowners on the sidelines after the Great Recession.

While those with fantastic credit are debating whether or not mortgage rates will go even lower than their current record lows, those with average and even above average credit are struggling to get access to loans, even as the housing market is rebounding.

Alan Ikemura, Senior Product Manager of Experian Decision Sciences, says there are several signs in the most recent Experian-Oliver Wyman Market Intelligence report that point to a housing recovery in 2013, and more opportunities for those with average credit to get access to home loans.

"Trend-wise, you are seeing improvements all over the place," Ikemura says. "Obviously, some areas are greater than others."

Here are a few of the highlights from the most recent Experian-Oliver Wyman Market Intelligence report, a quarterly analysis of consumer credit trends.

The first trend showing some promise for potential homebuyers is the stability in mortgage originations. While mortgage origination volume has fallen off significantly from the fourth quarter of 2009 to the first quarter of 2010 (-23 percent) and the fourth quarter of 2010 to the first of 2011 (-38 percent), the drop from the 2011 to 2012 has been much smaller, at only 2 percent.

The stabilization of the mortgage originations from quarter to quarter is a very encouraging sign, Ikemura says. However, it should be noted that a large proportion of the originations are refinances, rather than purchases.

Another ray of light in the mortgage market is the number of new accounts. Experian found that, although they are not back to 2009 levels, the number of new mortgage accounts in the first quarter of 2012 was up anywhere from 7 percent to 33 percent in all five U.S. regions.

New home sales rose 18.1 percent from June 2011 to June 2012, while the interest rate on the 30-year fixed-rate mortgage has dropped 18.4 percent during that same time period. However, all the good news in the data doesn't necessarily mean a recipe for success.

"The one question is going to continue to be the conservativeness of lenders," Ikemura says. "We haven't seen that they've loosened their belts yet. That could potentially prevent growth as well."

The National Association of Realtors, a trade organization that is lobbying for less restrictive lending standards, recently conducted a survey of more than 3,400 of its members to gauge current trends in the housing market. The survey showed that respondents saw more than 50 percent of loans went to borrowers with FICO scores above 740 in August.

The NRA sees these lending standards as particularly tight, and its chief economist, Lawrence Yun, argues that opening up mortgage lending could have a larger impact on the economy.

"Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year," he said. "The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact."

Ikemura says a lack of activity in the housing market could be linked to home prices that, while rebounding, are still not back to pre-recession levels.

"Even with a good credit score, a lot of these people are still underwater," he says "That speaks to the immobility of the market."

See more on Credit.com:
How Refinancing Can Affect Your Credit
Is it Greedy to Wait for Lower Interest Rates?
How a Mortgage Can Help (or Hurt) Your Credit

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Home Financing and Down Payments