“Every month credit seems to improve and become more available; I don’t think the floodgates will open, but it will be gradual,” Reigis Recchia, a broker with ArborOne Mortgage, told Mortgage Professional America. “And that’s a good thing – slow and steady is a good policy because there were many problems before [when credit was more widely available].”
According to the Mortgage Bankers Association, mortgage credit availability increased 1.5% in October.
"Credit availability increased in October mainly as a result of new conforming loan programs, many of which were affordable housing programs which have lower down payment requirements," said Mike Fratantoni, MBA's chief economist.
An increase in credit availability indicates lending standards are loosening.
“The index was benchmarked to 100 in March 2012,” the MBA wrote. “Of the four component indices, the Conforming MCAI saw the greatest loosening (up 2.7 percent) over the month followed by the Government MCAI (up 1.9 percent), the Conventional MCAI (up 0.8 percent), and Jumbo
MCAI (up 0.5 percent).”
The increase in credit availability speaks to the confidence among lenders in the housing market and their underwriting practices.
The MBA’s credit availability index is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.), the MBA said.
The fact that credit is slowly becoming more available – rather than opening it up all at once – is a good policy, according to one professional.