Mortgage credit hits three-year high entering spring market

Mortgage credit availability reached a three-year high in time for the spring housing market, including a rebound in government-sponsored loan products.

The Mortgage Bankers Association Thursday also reported modest monthly gains in conforming and jumbo credit in its Mortgage Credit Availability Index for March. The index's overall 108.3 reading represented a 1.1% gain from February, and the highest figure since August 2022. 

"Although March was volatile for mortgage rates and they moved higher over the month, there was growth in streamline refinance programs for lower credit score borrowers," said Joel Kan, the trade group's vice president and deputy chief economist, in a press release. 

The average 30-year fixed-rate mortgage dipped under 6% at the end of February, but climbed to the mid-6% range last month as macroeconomic factors from the Iran war impacted 10-year Treasury yields. The rate movements have spurred another lock-in effect reminiscent of the market following steady, and steep, rate climbs out of the pandemic. 

The MCAI for March, based on data from ICE Mortgage Technology, was the third consecutive monthly increase, as higher numbers represent loosening lending standards. It still however remains closer to the 2012 overall index benchmark of 100, and further from the soaring credit availability readings of yesteryear. 

The MCAI for government products rose 1.7% in March, reversing a 0.8% slide in February. The MBA last month explained the wavering government index on Federal Housing Administration loan performance, as existing borrowers are particularly struggling compared to the larger market. 

While the Conventional MCAI increased 0.6%, the Jumbo MCAI rose another 0.8%, also on a three-month positive streak. Kan attributed that rise to greater availability of non-qualified mortgage loan programs, a market which has been riding some tailwinds since last year.