The Urban Institute’s Housing Finance Policy Center is a think tank that analyzes mortgage and housing data throughout the United States. They recognize trends and provide insightful information to help lenders and consumers.

Housing Credit Availability Index

Every quarter, they update the housing credit availability index (HCAI), which measures the percentage of owner-occupied home purchase loans that are likely to default. To default means that the borrower has not paid for more than 90 days past their mortgage payment due date. Ultimately, a lower HCAI means that lenders are imposing tighter lending standards in order to take less risks of defaulted loans. On the other hand, a higher HCAI shows a higher tolerance for defaults. Lenders are willing to take more risks and that makes it easier for more borrowers to qualify for mortgage loans.

Naturally, the market began to tighten significantly at the end of Q1 2020 because of the COVID-19 shutdowns throughout the country. This bled into Q2 before the real estate market was opened back up in the latter half of that quarter. During this time, mortgage availability was cut for borrowers with lower credit ratings. In other words, it became more difficult for unqualified borrowers to secure a home loan—even though the pent-up buyer demand was there.

Effects of Mortgage Forbearance

Another complication in the availability of credit comes with the mortgage forbearance options taken by many homeowners. These delays in making mortgage payments naturally dwindle the housing credit availability with fewer funds available to loan out to new borrowers. It’s easy to understand why lenders would want to take less risks on borrowers who could potentially default on their loans later.

As you can see from the charts below, risk levels for both borrowers and lenders have been down since the 2008 housing crisis. Lenders were already being careful about who they loaned to well before the pandemic, but COVID-19 has forced them to tighten the reins even more.

Graphs courtesy of Mortgage News Daily

Advantages to Qualified Borrowers

The good news is that mortgage rates are still at historic lows and buyer demand is high, so those who are in position to qualify for a home loan shouldn’t have any problems. Money is basically cheap right now, which gives buyers a lot of purchasing power. At the same time, mortgage lenders aren’t just going to give home loans to everyone. They are looking to take as little default risk as possible.

The Urban Institute’s research shows that there is still ample space to expand credit availability without affecting the default risk too much. The pre-crisis standard was around 12.5% between 2001 to 2003, and we’re well below that these days with tighter mortgage requirements.

If you are looking to buy a new home, it’s more important than ever to get pre-approved for a mortgage loan. It will make your purchase offers look stronger, it will let you know exactly what you can afford and it will minimize the risk of any complications happening during the final loan underwriting process at closing. To get started on your home loan, call Transparent Mortgage today at (619) 701-3906 or email me directly at

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.