Lenders have loosened credit conditions in today’s high-rate environment. But credit is still tight on a historical basis, according to data from the Mortgage Bankers Association.
MBA reported that its Mortgage Credit Availability Index rose by 0.6% in September to 97.2. It was 96.6 in August and 102.5 one year ago. When the MCAI decreases, it indicates that lending standards are tightening. An increase indicates loosening credit.
Lenders increased their loan offerings across the spectrum. In particular, adjustable rate mortgage and non-qualified mortgage programs saw increases.
“There were more loan programs for ARM loans for borrowers seeking lower initial monthly payments and also some increases in non-QM product offerings,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Credit availability increased across all loan categories, with the jumbo index increasing for the second straight month, driven by the expansion of ARM and non-QM offerings.”
He added, “Industry capacity has declined significantly since the peak originations months in 2021, and MBA expects to see further declines in originations volume, given the high interest rate environment and typical seasonal slowdown.”
The indices of conventional, conforming, and jumbo each rose, to the tune of 0.6%, 0.8%, and 0.2% respectively on a month-to-month basis.
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