The chance of a home borrower defaulting on a mortgage has declined dramatically since the period before the last Great Recession, according to a study by Clever Real Estate that compares mortgage debt from the late 2000s to today.

The chance of a mortgage holder defaulting is now 2.3%, while those chances were more than 16% in 2006, said the real estate firm’s study, “How Has the Mortgage Market Changed Since the Great Recession?

However, that also means fewer mortgages are being approved.

“These data really indicate that financial institutions are practicing better lending, but that means fewer people qualify for mortgages,” said Francesca Ortegren, data scientist for Clever Real Estate, an education and research organization and real estate company. “If someone is hoping to buy a home soon, the best thing they can do is pay down debts, save enough for a decent down payment and bump up their credit scores.”

The study, which was compiled before the economic impact of the coronavirus could be felt, holds both good and bad financial news for mortgage applicants and holders.

For instance, while the largest share of mortgage down payments now are within the 20% to 40% range, the proportion of down payments of less than 20% has increased 75% since 2008. The average debt-to-income ratio has hovered around 95% since 2015, which, while lower than 2008 levels, is significantly higher than historical averages, the report said.

The average American's credit score hit an all-time high of 703 in 2019. But at the same time, subprime lending, a precursor to the 2008-2009 meltdown, has increased 63% since 2010. Americans are $14 trillion in debt now. Debt other than mortgages is $1.55 trillion more today than it was in 2008, which limits the potential pool of mortgage borrowers.

For those who want to acquire a mortgage, “paying down debts might be the most important” action they can take,” Ortegren said in an e-mail. “Younger people have a ton of student loan and credit card debt that hinder their ability to save for a down payment or qualify for a mortgage. Unfortunately, people are more likely to default on those credit card and student loan payments, as well, leaving them at risk for long-term credit and financial problems.”

The long-term economic effects of the coronavirus “are hard to estimate,” she added, “but they will likely be dependent on how the overall economy reacts and recovers.”

“I expect the housing market will suffer some, but hopefully it won’t be as devastating as previous recessions.”