Mortgage program diversity helps push up credit availability in September

Lenders continue to adapt in assisting qualified buyers in the hot housing marketplace by adding specialized loan programs, ushering in an increase of credit availability last month, according to the Mortgage Bankers Association (MBA).

The organization’s Mortgage Credit Availability Index (MCAI) rose by 1.5% to a reading of 125.6 in September, its highest point since May 2021. Increases in the index indicate that lenders are easing credit standards for mortgages while declines signal that credit availability is tightening.

Joel Kan, the MBA’s associate vice president of economic and industry forecasting, noted the increase of loan program diversity that helped push the index upward.

“We are still seeing elevated rates of home-price appreciation and lenders are responding by offering a wider range of loans to accommodate qualified buyers,” Kan said. “Jumbo credit availability increased almost 6% to its highest level since March 2020, with more loan programs for non-QM jumbos, and loans catering to self-employed borrowers or those with nontraditional sources of income.”

Such moves were reflected last month in the increase of the conventional MCAI, one of the subindexes of the overall credit availability index. The conventional MCAI was up 4.5% during the month and its own subindexes (the jumbo MCAI and conforming MCAI) were up 5.8% and 2.6%, respectively.

“The conforming index indicated a greater supply of loans for cash-out refinances, investor properties and adjustable-rate mortgages,” Kan said. “Even as mortgage rates continue to rise, cash-out refinances remain an option for borrowers who have sufficient home equity and need additional cash.”

Gains in the conventional MCAI were enough to offset a moderate backtrack in the government MCAI, the overall MCAI’s other component subindex, which receded by 0.7% in September.

Last month’s increase marked the seventh month in 2021 that lending standards have loosened. While credit is easing, however, the uncertain financial environment tied to the COVID-19 pandemic still has lenders somewhat wary. Overall, credit availability remains about 30% lower than it was in February 2020.


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