Research: Tight Credit significantly impacting Purchase Mortgage Lending

The researchers compared currently lending to lending standards in 2001. They found that if lending standards were similar to 2001 (prior to the loose bubble lending), then there would have been up to 1.2 million more purchase mortgage in 2012.

From Laurie Goodman, Jun Zhu, and Taz George: Where Have All the Loans Gone? The Impact of Credit Availability on Mortgage Volume

Credit availability for mortgage purchases has been very tight over the post-crisis period. In fact, over the past decade, the number of mortgages originated to purchase a home declined dramatically. In this commentary, we examine this decline and explain how limited access to credit has contributed to the drop. We estimate the number of “missing loans” that would have been made if credit availability were at normal levels—we find this number could be as high as 1.2 million units annually....

Based on the upper bound calculation, 1.22 million fewer purchase mortgages were made in 2012 than would have been the case had credit availability remained at 2001 levels. ... This is, however, likely to overstate the impact of tighter credit. We calculate a lower bound estimate, using a similar methodology, to be 273,000 missing 2012 first lien purchase loans. ... The truth is somewhere between these estimates, but likely closer to the upper bound because many prospective borrowers with FICO scores well above 660 are affected by the tight credit box and credit overlays.