October saw mortgage credit availability increase despite government programs tightening their standards, the Mortgage Bankers Association (MBA) reported.
The MBA’s Mortgage Credit Availability Index (MCAI) grew month over month by 0.9% to 185.1 in October. The MCAI, which was benchmarked to 100 in March 2012, is a metric that measures the availability of mortgage credit at any point in time. Rising readings in the index indicate lenders are loosening their credit standards, while declines in the MCAI suggest that credit availability is tightening.
The total MCAI grew despite its component Government MCAI, which measures credit availability in government-backed mortgages, decreasing 0.9%. Joel Kan, the MBA’s associate vice president of economic and industry forecasting, noted that “credit supply for government mortgages continued to lag, declining for the sixth straight month.”
The overall increase instead was driven by loosening lending standards in conventional loan programs, including, according to Kan, “more for borrowers with lower credit scores, as well as for investors and second home loans.” The Conventional MCAI rose 2.4%, continuing a recent growth pattern as the Government MCAI dips.
Of the component indices of the Conventional MCAI, the Conforming MCAI rose month over month by 1.3%, while the Jumbo MCAI grew 3.1%. The jump in jumbo credit availability followed a September gain of 4.7%. In September, jumbo credit availability bounced back after a 3.2% August drop. Prior to that, it had been increasing for seven straight months, with the July figure setting a record high before October’s reading.
“The jumbo credit index increased 3 percent to another survey-high, as that segment of the market stays resilient despite signs of a slowing economy,” Kan said.
