Mortgage credit supply reaches highest level since May 2021

Lenders loosen their standards as part of efforts to broaden their product offerings

Mortgage credit supply reaches highest level since May 2021

Mortgage credit availability surged to a 10-month high in February despite lenders becoming increasingly bearish due to choppy market conditions.

The Mortgage Bankers Association’s latest Mortgage Credit Availability Index (MCAI) edged up by 1% to 126 in February. According to MBA, a decline in the index suggests a tightening in lending standards, while increases indicate loosening of credit. The MCAI was benchmarked to 100 in March 2012.

Joel Kan, associate vice president of economic and industry forecasting at MBA, said the increase was “driven by growth in jumbo loan programs, as well as those that include allowances for ARMs and expanded credit score and LTV requirements.”

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The Conventional MCAI posted a 3.2% increase, while the Government MCAI dipped by 0.9%. Of the component indices of the Conventional index, the Jumbo MCAI rose by 3.9%, and the Conforming MCAI climbed by 2.2%.

“In a period of rising mortgage rates, affordability challenges, and declining volume, lenders have made efforts to slightly broaden their product offerings,” Kan said.