A decrease in credit score averages stems from a market composition change rather than looser underwriting, according to an Urban Institute report released Friday.

Increases in the consumer costs of Federal Housing Administration mortgages  relative to agency loans with private mortgage insurance have driven would-be FHA borrowers into Fannie Mae and Freddie Mac products, according to the report.

Credit score averages appear lower if one examines FHA and Fannie/Freddie score averages separately, the report by UI senior research associate Jun Zhu, UI Housing Finance Policy Center director Laurie Goodman, and UI research associate Bing Bai finds.

The Fannie/Freddie score average is 752 compared to 758 a year ago, and the FHA average is 686, compared to 697 a year ago. However, the average stays around 730 year-to-year if agency and FHA loans are combined, according to the report.

This is because FHA loans generally have lower credit scores. So when FHA loans transfer to the agency sector, it weighs down the overall score for the Fannie/Freddie market.

Also, the scores on loans that migrate to the government-sponsored enterprises tend to be higher relative to other FHA loans. So the FHA market's average score falls as a result.

Regardless of loan type, the lowest credit score minimums in a fourth quarter 2013 survey of lenders were lower than they were in a year earlier, statistics from National Mortgage News' Quarterly Data Report have shown.

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