Smart Borrower Blog

Mortgage Credit Availability Rises in February


Mar 13th, 2019 @ 1:59 PM by Amber Nelson


Lenders made mortgage credit slightly easier to obtain in February, according to the Mortgage Bankers Association, being led by a loosening of jumbo loan standards.

The MBA’s Mortgage Credit Availability Index (MCAI) inched to 180.1, up 0.6% from January. Increases in the index indicate loosening of mortgage standards while decreases signal tighter underwriting. The MCAI was benchmarked to 100 in March 2012. Credit availability has made a fairly steady increase since then, although it experienced a significant decline in the last quarter of 2018.

“Credit availability increased in February as a result of new jumbo offerings brought to the market, both for agency jumbo and non-agency jumbo programs,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “We also saw some expansion in credit for borrowers with lower credit scores and higher LTVs, although credit availability for government programs remains tighter following the scaling back of VA refinance programs.”

Split into loan types, jumbo loans saw the biggest increase in their credit availability. The Jumbo MCAI picked up by 2.2% while the Conventional MCAI rose 1.1%. The jump in jumbo loan correlates with increases in jumbo loan applications and rising mortgage loan amounts. Borrowers in the higher price ranges are currently making the most waves in the real estate market with first-time buyers still finding it difficult to break in based on climbing prices.

Government loans, including VA, FHA, and USDA, were almost unchanged with a 0.1% increase. The Conforming MCAI fell by 0.2%.

The MBA’s index is calculated from data gathered from 95 lenders and investors. The MCAI takes into account the average credit score and loan-to-value-ratio as well as things like loan type. All factors are combined to determine the direction of current mortgage lending standards.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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