Lenders Supply Extra Jumbo Mortgage Choices as Credit score Requirements Ease Barely
Access to jumbo mortgages rose nearly 6 percent in September, pushing the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI) for the third straight month. The index rose 1.5 percent to 125.6, its highest level since May. A rise in the index suggests a loosening of credit standards. The index was rated at 100 in March 2012.
The conventional MCAI increased 4.5 percent while the state MCAI decreased 0.7 percent. Of the component indices of the conventional MCAI, the Jumbo MCAI rose by 5.8 percent and the conforming MCAI by 2.6 percent.
Joel Kan, Associate Vice President of Economic and Industry Forecasting at MBA, said, “Last month’s expansion was driven by a 4.5 percent increase in the conventional index while the government index declined slightly. Even with increases seven out of nine months in 2021, overall credit availability is still around 30 percent lower than in February 2020 before the pandemic. “
Kan added, “We are still seeing steep spikes in home prices and lenders are responding by offering a wider range of loans to suit qualified buyers. The availability of jumbo loans rose almost 6 percent to its highest level since March 2020, with more loan programs for non-QM jumbos and loans for self-employed borrowers or borrowers with non-traditional sources of income.The corresponding index showed a greater supply of loans for Cash-out refinances, investor real estate, and adjustable rate mortgages (ARMs). Even if mortgage rates continue to rise, cash-out refinancing remains an option for borrowers who have enough home equity and need additional cash. ”
The MCAI and each of its components is calculated using several factors related to the borrower’s creditworthiness (credit rating, credit type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders / investors are combined by MBA with data provided through a proprietary product by Ellie Mae. The resulting calculations are summary measures that indicate the availability of mortgage credit at a specific point in time. The base period and values for the overall index are March 31, 2012 = 100; Conventional March 31, 2012 = 73.5; Government March 31, 2012 = 183.5.