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At first glance, financial data would suggest that it is easier to get a mortgage today than it was before the housing crisis. The reality, however, is that the mortgage denial rate is actually lower today because many less qualified homebuyers aren’t applying for mortgages anymore, suggests new data from the economic and social research organization Urban Institute.

Traditionally, researchers and policymakers have used mortgage denial rates as a gage of mortgage credit availability. But this traditional method actually “significantly underestimates” the number of borrowers being turned down for a mortgage, says the Urban Institute.

In order to get a more accurate assessment of mortgage credit availability, the organization eliminated borrowers with perfect credit from the equation entirely. These borrowers would never be denied credit, it rationalized. And by including these borrowers, it skews the total picture — making it seem like more applicants are getting mortgage approvals.

By focusing on just borrowers with less-than-perfect credit, the Urban Institute believes a more accurate picture can be painted. According to Urban Institute’s “real” data, it was actually more difficult for lower-credit borrowers to get a mortgage in 2014 and 2015 than it was before 2006, when the financial crisis began — the exact opposite of what traditional data has been suggesting.

Further, fewer homebuyers with less than-perfect credit are actually applying for a mortgage than before. These borrowers are more likely to be filtered out during the “pre-approval” process, and others are just not applying at all.

For borrowers with less-than-perfect credit, it is still easier to qualify for a Federal Housing Administration loan than a conventional loan, added the Urban Institute.

The temptation is to say that fewer borrowers with lower-credit is better for the industry, but the Urban Institute refutes this line of thinking. The financial crisis wasn’t the result of risky borrowers but risky products, it said.

Click here to read the entire report.

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