After falling consistently throughout the summer and early fall, mortgage credit availability increased in November for the second consecutive month, according to the Mortgage Bankers Association (MBA).
The MBA’s Mortgage Credit Availability Index (MCAI) rose in November to a reading of 122.2, an monthly increase of 0.7%. Increases in the MCAI signal loosening credit standards, while decreases indicate that lenders are tightening credit criteria.
With the job market continuing to recover (albeit slower than in previous months) and the housing market enjoying robust borrower demand, Joel Kan, the MBA’s associate vice president of economic and industry forecasting, noted that the MCAI is now at its highest reading since July.
“There was an increase in credit availability for jumbo loans, as well as loan products with low credit scores, higher LTVs, and adjustable-rate features,” Kan said. “Home purchase and refinance activity have remained strong in recent months, and the increased credit supply should help qualified borrowers still looking to capitalize on record-low mortgage rates.”
Kan’s observations are evident in the movement of the total MCAI’s component indices. The Conventional MCAI, which tracks credit availability for non-government loan programs, rose 1.3% in November. Much of that growth was driven by improved access to jumbo loans, with the Jumbo MCAI, a further sub-index of the Conventional MCAI, increasing by 1.6% month over month.
The conforming MCAI, which makes up the other half of the Conventional MCAI, was also up, increasing by 0.9%.
Meanwhile, the Government MCAI component of the total MCAI rose as well in November, though by just 0.3%. Kan acknowledged that the unevenness of the credit availability rebound among loan products has had an impact on some borrower demographics.
“Credit availability is still more than 30 percent below pre-pandemic levels and close to the restricted standards seen in 2014,” he said. “This has especially impacted government borrowers and first-time buyers.”
