Mortgage credit standards loosen as lenders increase refi, jumbo offerings

With lenders loosening their purse strings to fuel the midyear refinance surge, the Mortgage Bankers Association (MBA) reported that credit availability grew in August, according to its Mortgage Credit Availability Index (MCAI).

The index rose by 3.9% from July to August to reach a reading of 123.7. Increases in the MCAI (which was benchmarked to 100 in 2012) indicate loosening credit while declines signify that lending standards are tightening.

“Credit availability increased in August, driven by significant activity across all indexes,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. “This expansion was heavily driven by the addition of refinance loan programs at a time when the 30-year fixed rate has been above 3% for the past month, and refinance activity has trended lower.”

Of the MCAI’s component indices, the conventional MCAI rose 7.6% while the government MCAI was up 1.1%. Among the conventional index’s own component indices, the jumbo MCAI increased by 9.4% and the conforming MCAI grew by 5.1%. The jumbo MCAI hit its highest level since March 2020, with lenders continuing to widen their offerings of nonqualified jumbo mortgages and agency-eligible, high-balance loan programs. Credit availability in the conforming space grew thanks to more lenders adding refi programs aimed at low-income borrowers through Fannie Mae and Freddie Mac.

“There was also a slight expansion in government credit, as more investors offered streamline refinance options for FHA and VA loans,” Kan added.


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