After ticking down in September, mortgage credit availability jumped in October to its highest level since April of last year, driven by gains in all loan categories, according to a report from the Mortgage Bankers Association (MBA).
The MBA’s Mortgage Credit Availability Index (MCAI), which gauges the availability of credit for borrowers, rose 0.7% to 99.2 in October, after falling 0.5% in September. The index’s benchmark is 100, which is the level of credit available in March 2012. A decline in the index indicates that lending standards are tightening, and an increase means that credit is more available.
The MCAI was north of 180 in late 2019, before the pandemic and resulting economic issues set the index in freefall. After bottoming out in December of 2023, at a low of 92.1, the index has been making an uneven recovery through much of 2024.
Other indices that track the risk and availability of credit for the conventional, government, conforming and jumbo markets all showed gains. The conventional MCAI increased 1.0% in October. Of the conventional index’s component indices, jumbo increased 1.2% and conforming rose 0.9%. The government MCAI rose 0.4%.
The MBA uses a series of factors to gauge borrower eligibility, including credit scores, loan types and loan-to-value ratios. These metrics and underwriting criteria from more than 95 lenders and investors, along with data from ICE Mortgage Technology, are combined by MBA to create the indices.
While the loosening of credit was welcome news, Joel Kan, MBA’s vice president and deputy chief economist, said the greater credit availability was limited to a subset of borrowers.
“Despite the across-the-board increases, overall credit supply remains tight, with the index still near the very low levels of 2011-2013,” Kan said. “Notably, while credit availability was higher over the month, it was for a specific segment of borrowers. Credit supply improved in loan programs for cash-out refinances and those that require lower LTV and higher credit scores. Additionally, there was greater availability of jumbo loan programs, which pushed the jumbo index up over the month.”
