Driven by another big jump in the jumbo loan sector, mortgage credit availability increased in September, the Mortgage Bankers Association (MBA) reported.
The MBA’s Mortgage Credit Availability Index (MCAI), which analyzes data from Ellie Mae to measure lending standards, rose by 0.9% to 183.4 in September. A rise in the index denotes increasing credit availability, so the slight uptick last month suggests that lenders are loosening their credit standards at the onset of the fall homebuying season.
A main trigger for the increase is jumbo loans, with the jumbo component index of the MCAI jumping 4.7% on a monthly basis.
“Credit availability increased slightly in September, driven by a 5% increase in the supply of jumbo loans,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “The jumbo index, which grew from a combination of lower credit-score requirements, non-QM loans and investor products, is now at a record high since tracking began in 2011.”
The jumbo component index bounced back after a 3.2% decrease in August. Prior to that, it had been increasing for seven straight months and July’s reading was its previous record high.
The conventional component of the MCAI also bounced back in September, growing 2.4% after seeing a 3.6% dip in August — the first tightening for conventional loan credit in 2019. On the other hand, the trends of narrowing credit availability in conforming and government loan programs continued, signaling that some lenders may be drawing back in anticipation of a slowdown. The conforming component index dropped 1.1% in September, while the government index decreased by 0.6%.