Mortgage Credit Availability Hits Two-Year High

A recent surge in Non-QM borrowing and cash-out refinances has propelled a rise in mortgage credit availability heading into the fall.

The Mortgage Bankers Association (MBA) updated its Mortgage Credit Availability Index (MCAI) for August to show a monthly increase of 0.9% to 99.0.

The Conventional MCAI increased 18% in August, while the Government MCAI went unchanged. The Jumbo MCAI increased by 1.5%, and the Conforming MCAI rose by 2.6%.

Increases in the MCAI, which employs data from ICE Mortgage Technology, are indicative of loosening credit standards. 

“Credit availability increased in August, with the conventional credit index reaching its highest level since July 2022,” MBA Vice President and Deputy Chief Economist Joel Kan said. “This was driven by increased cash-out refinance and non-QM programs. Additionally, the jumbo index increased for the eighth consecutive month to its highest level since 2022.”

Refinance applications more than doubled in August compared to last year, the MBA reported. 

“Mortgage rates have been on the decline since May 2024, prompting a pickup in refinance activity, which remains limited to a smaller segment of homeowners with higher rates,” Kan said. “As a result, the increase in credit availability was the result of lenders broadening their refinance offerings to meet the greater demand.”