Credit availability continues to expand, but is leveling off

Mortgage

With affordability still an issue despite falling interest rates and harnessed home value growth, lenders further loosened credit standards in June, although future growth remains questionable, according to the Mortgage Bankers Association.

Jumbo loan product availability reaching an eight-year high pushed overall mortgage credit accessibility in June. The MBA’s Mortgage Credit Availability Index increased 0.2% from May to 189.8, its highest level since 2008. It marks a year-over-year jump of 9.8 points.

MCAI

“Overall credit availability increased only slightly in June over May’s levels. Jumbo credit availability increased for the sixth month in a row and is at its highest level since 2011, when the survey began,” Joel Kan, the MBA’s associate vice president of economic and industry forecasting, said in a press release.

“Credit availability has generally increased in 2019 as lenders have worked to meet affordability challenges. Because mortgage rates have recently fallen and home price growth has decelerated in many markets, credit availability may stabilize at its current levels.”

The MCAI’s conventional component edged up 0.3% from May, as the jumbo segment rose 0.6%. Meanwhile, the conforming and government segments both decreased 0.1%. Each loan type’s credit availability identifies trends of the respective segments.

A decline in the MCAI represents a tightening of standards and an increase suggests credit is loosening. The index is calculated by the MBA using loan program data from Ellie Mae’s AllRegs Market Clarity database with a benchmark of 100 established in March 2012.

While the credit availability index has grown steadily — especially through the first half of 2019 — it pales in historical comparison to the boom period of 2006. Before the housing bubble popped, the index soared close to 900.


Paul Centopani


For reprint and licensing requests for this article, click here.


Leave a Reply