Mortgage credit availability inched upward in August, continuing in a direction that indicates some stabilization in the mortgage market, according to the Mortgage Bankers Association.
The MBA's Mortgage Credit Availability Index increased 0.1% to 104 last month. The report follows
"Mortgage credit availability increased slightly in August, driven by a small increase in ARM product offerings, which was similar to what we saw in July," MBA Vice President and Deputy Chief Economist Joel Kan said in a press release.
With the Federal Reserve expected to cut the federal funds rate next week, the average 30-year fixed mortgage rate
ARMs share of total mortgage applications jumped to 9.2% for the week ending Sept. 5 from 8.8% over the previous seven-day period, according to MBA's weekly survey of mortgage applications. The average rate for 5/1 ARMs fell to 5.77% from 5.9% last week as well.
The MCAI was benchmarked at 100 in March 2012, with growth meaning credit is loosening and drops indicating tightening, and considers factors such as credit score and loan type to calculate credit availability.
The conventional subindex continued its climb as well with a 0.3% increase, charged by a 0.7% hike in conforming MCAI, while jumbo MCAI remained unchanged. Conventional MCAI also rose in July, but was pushed by a 0.9% increase in jumbo lending, as conforming credit fell 0.5%.
With a 0.1% decrease in August, government MCAI, which measures federally-backed mortgage availability from the Federal Housing Administration, Department of Veterans Affairs and United States Department of Agriculture, has dropped 2% over the last three months after reaching its highest level since November 2023 in May.
"Overall industry capacity seems to have stabilized after some significant declines over the past few years as companies adjusted to a lower volume environment," Kan said. "Combined with recent economic uncertainty, those factors continue to keep credit supply relatively low."
