Already, credit score minimums are problematic for many would-be participants in the housing market. That's a trend that hasn't improved much in the past 12 months, and, as mortgage interest rates creep up in the wake of Federal Reserve moves, debt-to-income ratios are going to start becoming a big-time inhibitor.
Zillow data scientist Jamie Anderson looks at the reasons behind a somewhat alarming step backward in Zillow's Mortgage Access Index, which dropped more than five percentage points to its current level of 62.7, as lenders seem to be raising the bar on acceptable credit levels. Matters could worsen, Anderson says:
Looking ahead, as mortgage interest rates rise, more income will be needed to cover even marginally more expensive mortgage payments. Those potential borrowers currently bumping up against the 45 percent DTI ceiling may be pushed across the threshold when considering these higher payments.