Since COVID-19 shocked the US economy, it has slowly shown signs of recovery as US jobs gradually return and the availability of mortgage credit continues to increase.
The increase in credit availability is evident in November data from the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA), which analyzes data from Ellie Mae’s AllRegs® Market Clarity® business intelligence tool.
“The availability of mortgage credit increased slightly in November to reach its highest level since July, as the labor market improves and the housing sector continues to show strong demand from borrowers,” said Joel Kan , associate vice president of economic and industrial forecasting of MBA in a press release. . “There has been an increase in the availability of credit for jumbo loans, as well as loan products with lower credit scores, higher LTVs, and adjustable rate features. “
The MCAI rose 0.7% to 122.2 in November, indicating that lending standards have eased. In November, the conventional MCAI rose 1.3%, while the government MCAI rose 0.3%. The MBA also reports that among the component indices of the conventional MCAI, the Jumbo MCAI increased by 1.6%, while the Conforming MCAI increased by 0.9%.
“Home buying and refinancing activity has remained strong in recent months, and increased credit supply should help qualified borrowers still looking to capitalize on record mortgage rates,” Kan said. “However, the availability of credit is still more than 30% below pre-pandemic levels and close to the low standards seen in 2014. This has particularly affected public borrowers and first-time buyers.”
MBA explains these indices: “Conventional, Government, Compliant and Jumbo MCAIs are constructed using the same methodology as Total MCAI and are designed to show the relative credit risk / availability for their respective index. The main difference between the total MCAI and the component indices is the population of loan programs they review.
The Bankers Association adds that “the MCAI government reviews FHA / VA / USDA loan programs, while the Conventional MCAI reviews non-government loan programs. MCAI Jumbo and Conforming are a subset of conventional MCAIs and do not include FHA, VA, or USDA loan offerings.
Meanwhile, the Jumbo MCAI reviews conventional programs that are outside of compliant loan limits. In contrast, the Conforming MCAI reviews conventional loan programs that are under the umbrella of conforming loan limits.