MBA: Lenders Make it Easier for Buyers to Qualify

As interest rates rise, fewer homeowners refinance. As a result, lenders are sitting on more cash and willing to ease lending criteria, notably for jumbo loans.

WASHINGTON – The availability of mortgage credit increased in December, according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA). The index is based on data from an Ellie Mae business tool, AllRegs Market Clarity.

The MCAI rose 0.8% to 125.9 in December. If the MCAI declines, it suggests that lending standards are tightening; if it increases, it suggest a loosening of credit by lenders. The index was benchmarked to 100 in March 2012.

The MCAI for conventional loans increased 0.8%, while the government MCAI (FHA, VA, USDA) increased by 0.7%.

Two categories under the Conventional MCAI umbrella also rose month-to-month – jumbo loan MCAI increased by 0.6%, while the MCAI for conforming loans rose by 1.1%.

“Credit supply increased in December, with growth across both conventional and government segments of the market,” says Joel Kan, MBA’s associate vice president of economic and industry forecasting. “The overall credit index increased to its highest level since May 2021, but remained 30% below its pre-pandemic level.”

Kan says December’s looser credit standards mainly came in the adjustable-rate-mortgage and lower-credit-score markets “likely due to a combination of the rising rate environment and affordability challenges. Lenders expanded offerings to qualified borrowers who were the most impacted by these market conditions.”

He also notes an uptick in government streamline refinance programs “to aid borrowers still looking to refinance before rates rise even more.”

Year-to-year, however, jumbo loans saw the biggest spike in looser credit standards.

“The overall supply of mortgage credit only grew around 3% compared to the same month a year ago, with a 34% increase in jumbo credit availability contributing to most of that growth,” Kan says. “Government credit supply, as well as conforming credit, saw tightening last year.”

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