Mortgage credit availability continues to improve

Jumbo loan availability expands as non-QM mortgages gain traction

Mortgage credit availability continues to improve

Mortgage credit supply rose for the third straight month as lenders continue to loosen their lending standards, according to the Mortgage Bankers Association (MBA).

MBA’s Mortgage Credit Availability Index (MCAI) edged up 1.1% to 93.9 in March, which means looser credit compared to March 2012, the benchmark for the index.

Joel Kan, MBA’s vice president and deputy chief economist, said the increased supply was driven by growth in conventional loans, which were up 2.1% month over month.

“There were increased offerings of cash-out refinance loan programs across fixed rate and ARM loans, as well as for all occupancy types,” he said in the report.

Kan also noted that despite the third consecutive month of increased credit supply, the MCAI remains nearly 7% below the previous year and is still close to 2012 lows.

While the Conventional Index increased in March, credit availability for government-backed loans dipped slightly, with the Government MCAI decreasing 0.1%. The jumbo and conforming indices, which are part of the Conventional MCAI, rose by 2.6% and 1.2%, respectively.

“The jumbo index grew 2.6% last month and was the only component seeing credit supply higher than a year ago,” Kan noted. “Growth in jumbo credit availability was driven by both non-QM and super conforming loan programs.”

Amid a backdrop of squeezed affordability and elevated interest rates, many borrowers are turning towards the non-QM space – a trend William Fisher, executive vice president of non-QM at Kind Lending, expects to continue.

In a recent interview with MPA, Fisher said the non-QM sector is becoming increasingly attractive to borrowers, such as self-employed Americans and investment property borrowers, who find conventional loan rates prohibitive.

“So we see our side of the space picking up pretty well when the rates are high,” he said. “I see 2024 being a continuation of 2023 for the non-QM space, just increasing in volume. Obviously, there’s a lot of outside factors that could affect that, but all things being equal, it’s a fantastic place to be, and my outlook is bullish.”

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