A well-off young doctor will have to wait another year to buy a home -- did you ever hear anything so tragic? The NYT ran a misleading piece on the mortgage market, wrongly extrapolating from the experience of a relatively well-off young doctor. According to the NYT, the doctor makes a six-figure salary, but because she just started earning an income of this level, banks won't issue a mortgage. They want to see two years of tax returns. The NYT then tells readers that this doctor's experience are: "but far from unique, brokers and agents say." Actually, they are not far from unique. The number of people who just started earning six figure salaries, who previously earned little, is trivial. Furthermore, we have a very good measure of the extent to which potential homebuyers are having trouble getting mortgages. Every week, the Mortgage Bankers Association puts out an applications index. It has been at very low levels all year. If creditworthy people were having trouble getting mortgages, then this index would be very high, since applicants might have to put in two or three applications for every one that is approved. In short, this article's assertion that there is a tight mortgage market has no foundation in reality. We have very good data indicating that the vast majority of mortgage applicants face no serious problems getting loans.
--Dean Baker