NEW YORK ( TheStreet) -- Mortgage credit conditions are tighter than they were even in the pre-bubble days and it is hurting the housing recovery and the economy.
In a new paper titled "Opening the Credit Box," noted Moody's Analytics economist Mark Zandi and Jim Parrott, a former White House policy adviser who is now with Urban Institute, argue that the pendulum has swung too far in the mortgage market and a balance needs to be struck between risk management and access to credit.
Tight credit conditions are most apparent in the average credit score of today's mortgage borrower.
The average score of households receiving purchase mortgage loans from government-sponsored enterprises Fannie Mae and Freddie Mac rose to a new high of 766 in June. That is 50 points over the average borrower credit score in the country. It is also 50 points higher than the average credit score on loans that were taken to purchase homes a decade ago, before the housing bubble.Current FHA borrowers have an average credit score above 700, also about 50 points higher than in more normal times. Meanwhile, none of the purchase borrowers this year had a credit score of less than 620, something that Zillow researchers