Smart Borrower Blog

Mortgage Rates Remain Low Even as Credit Tightens

Sep 14th, 2016 @ 7:41 PM by Amber Nelson

The availability of mortgage credit declined in August, according to the latest data from the Mortgage Bankers Association, yet mortgage interest rates remain near rock bottom levels.

The MBA’s Mortgage Credit Availability Index  fell 0.4 percent last month, an indication that mortgage credit was slightly harder to come by. Conforming mortgage loan credit availability decreased the most of any loan category, falling 0.9 percent. Government mortgage loan credit availability dropped 0.5 percent while the index for conventional mortgages fell 0.2 percent. The index for Jumbo mortgages actually rose 0.5 percent.

The change in mortgage availability had more do to with the number of lenders out there and less to do with credit standards being tightened, the MBA said. “Credit availability decreased slightly over the month, driven by one mid-sized investor closing their correspondent operations,” said Lynn Fisher, MBA’s Vice President of Research and Economics. “Despite the loss of all of the programs associated with this investor, the Jumbo MCAI increased by 0.5 percent, indicating that credit conditions continue to ease among jumbo loan programs.”

Meanwhile, for those like the jumbo loan applications who are able to qualify for mortgage funding the deals are sweet. Mortgage interest rates are close to all-time lows, having remained under 3.5 percent for 11 straight weeks, a feat not seen since the beginning of 2013. And while many experts forecasted rates to make a steady climb this year, at this point there seems to be little reason for them to rise in the foreseeable future.

Low rates are helping to boost refinance applications according to mortgage giant Freddie Mac. “As mortgage rates continue to range between 3.41 and 3.48 percent, many are taking advantage of the historically low rates by refinancing,” Sean Becketti, Freddie Mac chief economist, said in a statement. “Since the Brexit vote, the refinance share of mortgage activity has remained above 60 percent.”

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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