The Mortgage Fix Worked After 2008. Does It Still Work for Today’s Homebuyers?

Getting a mortgage in America has become harder than it needs to be, according to a new report from the Pew Charitable Trusts, even with the 2008 housing crash still shaping how lenders think about risk. The report argues that reforms meant to prevent another crisis went further than necessary, locking out creditworthy buyers who could reasonably handle a monthly mortgage payment. Not everyone studying the housing market agrees with that conclusion.

The Average Credit Score for New Mortgages Just Hit a Record High

The numbers behind Pew’s argument are genuinely striking. The average credit score among people who successfully got a mortgage was 695 in 2006. That figure climbed sharply starting in 2007 and has kept rising since, reaching a record 742 in 2024, according to the report, 29 points above the average credit score of consumers nationwide. The share of mortgages going to borrowers with scores in the 600s has fallen sharply during that same stretch.

“The Pendulum Did Swing a Little Too Far,” Pew’s Lead Researcher Says

Tara Roche, who supervised the Pew report, described the shift in direct terms. “The truth is as much as we have as a country really put policies in place to get rid of those bad practices, the pendulum did swing a little too far,” she said. “It cut out a lot of people who could reasonably take on a monthly mortgage payment,” she added, describing the tightened standards as an overcorrection rather than a necessary safeguard.

Black Borrowers Have Been Hit Especially Hard, the Report Finds

The report argues these tighter standards have landed unevenly across different groups of borrowers. From 2013 to 2023, more than 35 percent of Black borrowers had credit scores in the 600s, compared with under 20 percent of borrowers overall, according to Pew’s findings. The report suggests younger, rural, and minority households have been disproportionately locked out of mortgage access as credit requirements climbed higher.

Pew Wants Fannie Mae and Freddie Mac to Loosen Their Rules

Pew’s recommendations center on federally backed entities that influence the vast majority of American mortgages. The report argues Fannie Mae and Freddie Mac, whose backing shapes nearly 9 in 10 U.S. mortgages, should loosen their requirements. It also proposes an alternative approach entirely: evaluating buyers based on actual money moving through their bank accounts, rather than relying primarily on a traditional credit score.

A 2008 Crisis Veteran’s Reaction: “No, No, Not Again”

Not every housing expert welcomed the report’s core argument. Sheila Bair, who chaired the Federal Deposit Insurance Corporation during the 2008 crisis and helped shape the government’s response to it, reacted with immediate concern. “When I saw this, I thought: No, no, not again,” she said. “Credit standards are not just to protect lenders and the government who’s guaranteeing most of these mortgages. They’re to protect homeowners, too.”

Pew Insists This Isn’t a Return to Subprime-Era Lending

Roche pushed back on the idea that Pew’s proposal risks repeating 2008’s mistakes. “We will not go back to that. It’s hard to make the low-documentation, no-documentation loans that existed back just prior to the Great Recession,” she said. Nearly 4 in 10 loans in 2006 required almost no proof of income, the report notes, compared to single digits today. “A healthy market means one that tries to mitigate risk,” Roche said, “not one that tries to completely eradicate it.”

One Analyst Blames the Crackdown Itself for Causing the 2008 Crash

Housing analyst Kevin Erdmann offered a more unconventional read on what actually caused the 2008 crisis in the first place. “I would say the financial crisis itself, at the end of the day, was caused by the mortgage crackdown that started to hit hard at the end of 2007,” he said, arguing that federal agencies abruptly stopped serving lower-income borrowers, which he says collapsed home prices in those specific neighborhoods.

Another Economist Says It’s Not Credit Scores, It’s Just Prices

Other economists point toward a different culprit entirely behind today’s affordability struggles. Patricia McCoy, who oversaw mortgage markets at the Consumer Financial Protection Bureau after its creation, agreed credit requirements have likely climbed too high, but said that’s not really what’s keeping most buyers out. “Their incomes simply are not enough to buy the essential goods that they need to get through the month, let alone to buy a home,” she said, pointing to prices as the bigger barrier.

Washington Is Already Moving, Even as Experts Keep Disagreeing

Political momentum around loosening mortgage standards has already begun building regardless of these disagreements among experts. Congress’s major housing legislation this summer included provisions aimed at increasing mortgages under $100,000, and President Trump signed an executive order on “Promoting Access to Mortgage Credit.” Bair, for her part, remains cautious about pushing too far. “I think we’ve got it just about right in terms of credit standards,” she said.