Credit availability expanded for second month in a row: MBA

Lenders loosened their mortgage credit standards for the second month in a row in November because of strong housing demand and an improved employment picture at the time, the Mortgage Bankers Association said.

November's Mortgage Credit Availability Index was 122.2, up 0.7% from October's 121.3, and its highest level since July. In comparison, the index for November 2019 was at 188.9, near the post-housing crisis high point for loan program availability.

"Home purchase and refinance activity have remained strong in recent months, and the increased credit supply should help qualified borrowers still looking to capitalize on record-low mortgage rates," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "However, credit availability is still more than 30% below pre-pandemic levels and close to the restricted standards seen in 2014. This has especially impacted government borrowers and first-time buyers."

This month's gain was led by an increase in credit availability for jumbo loans, but also for applicants that have low credit scores and higher loan-to-value ratios. The amount of adjustable-rate products also increased for the second month in a row.

The conventional MCAI increased 1.3% compared with October, as its jumbo component increased by 1.6% and the conforming portion rose by 0.9%.

Meanwhile, the government MCAI increased 0.3% over October. Unlike the conventional index, government-guaranteed product availability was less affected by the pandemic, with this index remaining in the same general range over the past several months.

The MBA calculates the MCAI using loan program data from Ellie Mae's AllRegs Market Clarity database with a benchmarked value of 100 based on conditions in March 2012. Decreases in the index indicate stricter lending standards, while increases are a sign of loosening by mortgage originators.