11.7 million, the number of American individuals whom applied for home purchase mortgages in order to obtain a home. This was the year of 2005 in which applications were at their highest rate. Soon however, within a six year period that 11.7 million Americans declined to 3.6 million Americans seeking home loans. From 2011 to 2014 the number of applicants then increased by 1 million applications still leaving an over-all decrease from the 2005 number.

So why the decline in applications? There could be a wide variety of reasons to choose from. Yet, part of the reason for such a drastic decrease has to do with the distribution of credit scores. Let’s compare the years 2005 and 2010. In these two years the average credit score of someone who applied for credit on a home mortgage changed from 700 to 750. So the number of applicants decreases within this time range, yet the credit score of the applicants increases.

CoreLogic recently released this information. CoreLogic economist Archana Pradhan shared:
The share of applications and originations with less than a pristine credit score has declined. The difference is more pronounced for applications than for originations. The share of credit scores below 700 for applications has declined and has been offset by a greater share of credit scores above 740. From a credit space perspective, the similarity of the two density distributions for 2015 suggests that lenders are largely meeting the demand of borrowers applying for a loan. Thus, the observed decline in originations could be a result of potential applicants being either too cautious or discouraged from applying, more so than tight underwriting as the culprit in lower mortgage activity.

So basically with this data we can conclude that the decline in applicants is not because of mortgage lenders or even underwriting standards which has previously been believed to be the problem. With this information we are able to determine that it is likely the applicants who are potentially weeding their selves out before even applying. Consumers are, for whatever reason self-assessing and determining before they apply that they are not acceptable. According to Pradhan, “[M]ore consumer education such as counseling and financial literacy programs could be as or more successful in raising origination levels than introducing new lending products with lower credit standards.” More education is definitely key here in order to getting the number of applicants back up again.