Mortgage Lenders Offered More Credit to Consumers in October

An index measuring mortgage credit availability increased 70 basis points in October as some lenders reduced their credit score requirements, according to the Mortgage Bankers Association.

Typically when originators start to see volume declines, lenders drop minimum credit scores in order to maintain market share.

The Mortgage Credit Availability Index, which is calculated by MBA using data from AllRegs MarketClarity, is at 111.53, up from 110.74 in September and nearly even with the 111.5 posted in August. In July, the index hit a two-year peak at 112.27.

The mortgage market had been tightening the type of credit available in August and September as lenders reduced product options in anticipation of the qualified mortgage rule going into effect in January.

The tightening trend in preparation for QM is not going away, MBA notes. Other investors reduced the availability of cash-out refinances and limited some loan offerings to primary residences only where they previously allowed second and investor homes.