In recent months, however, lenders have relaxed their grip somewhat as the market has rebounded and home prices have soared.
More ways to get a mortgage are in the offing, mostly for borrowers with solid incomes and strong track records. Real estate analysts also say rising rates could spur renewed competition among lenders.
“They are considerably more flexible than they were two years ago. It’s gaining steam,” says Guy Cecala, publisher of Inside Mortgage Finance, a company that tracks and analyzes the mortgage market. “If you didn’t qualify a year ago, it wouldn’t hurt to go back and find out if you can qualify now.”
Bankers remain cautious but are becoming more accommodating, agreed Erin Lantz, director of Zillow Mortgage Marketplace: “The pendulum is swinging back to more normal, but still prudent, lending guidelines. Loans are becoming a bit more accessible.”
The Mortgage Bankers Association has come up with a tool, the Mortgage Credit Availability Index, to help measure trends in mortgage availability. The index rose 7.2 percent in May from May 2012, meaning it has become “somewhat easier” to obtain a loan, said Rick Allen, chief operating officer of MortgageMarvel.com, a mortgage shopping website.