Mortgage Credit Availability Rises In September, Signaling Loosening Credit Standards

Mortgage credit accessibility saw an uptick in September, according to the Mortgage Credit Availability Index (MCAI) from the Mortgage Bankers Association. 

The MCAI witnessed a rise of 0.6%, reaching 97.2 in September. A drop in the MCAI indicates tightening lending standards. Conversely, an uptick in the index reflects a relaxation of credit. Notably, the index had been standardized to a base of 100 in March 2012. Delving deeper into the September figures, the Conventional MCAI increased by 0.6%, while its government counterpart rose by 0.6%. Among the sub-indices of the Conventional MCAI, the Jumbo MCAI saw an increase of 0.8%, and the Conforming MCAI reported a rise of 0.2%.

“Credit availability increased slightly in September, as lenders increased their loan offerings marginally to meet the changing needs of borrowers who are facing higher mortgage rates,” said Joel Kan, MBA’s deputy chief economist. “There were more loan programs for ARM loans for borrowers seeking lower initial monthly payments and also some increases in Non-QM product offerings. Credit availability increased across all loan categories, with the jumbo index increasing for the second straight month, driven by the expansion of ARM and Non-QM offerings.”

Added Kan, “Industry capacity has declined significantly since the peak originations months in 2021, and MBA expects to see further declines in originations volume, given the high-interest rate environment and typical seasonal slowdown.” 

Between August and September, the MBA reduced its estimated loan origination volume for single-family residences from $1.7 trillion to $1.68 trillion.