More options for borrowers?
Mortgage credit availability increased in February, marking the third consecutive month of expansion, according to the Mortgage Credit Availability Index (MCAI) released by the Mortgage Bankers Association (MBA). The index, which is based on data from ICE Mortgage Technology, rose by 1.4% to 100.4.
MBA noted that a rise in the MCAI signals that lending standards are loosening, while a decline indicates tighter credit conditions. The February increase reflects greater investor interest in adjustable-rate mortgages (ARMs) and cash-out refinance loans, as well as continued growth in non-qualified mortgage (non-QM) loan programs, according to MBA vice president and deputy chief economist Joel Kan.
“The growth in credit supply was driven by greater investor appetite for ARM and cashout refinance loans. Similar to what we have seen in recent months, the growth of non-QM loan programs pushed the jumbo index higher over the month,” Kan said.
Segmented growth across categories
Both conventional and government mortgage credit supply expanded in February. The Conventional MCAI increased by 1.3%, reaching its highest level since June 2022, while the Government MCAI, which tracks FHA, VA, and USDA loans, also rose by 1.4%.
Within the Conventional MCAI, the Jumbo MCAI - representing mortgages that exceed conforming loan limits - saw a notable 1.9% increase, indicating greater access to larger loan amounts. Meanwhile, the Conforming MCAI, which tracks loans that fall within conventional loan limits, remained unchanged.
Source: MBA
Since 2021, the MCAI has remained well below pre-pandemic levels, though recent increases indicate a gradual loosening of credit conditions. The February reading of 100.4 represents a modest recovery from post-pandemic lows.
The MCAI measures US mortgage credit access based on borrower eligibility factors like credit scores, loan types, and loan-to-value ratios, using data from over 95 lenders. It is benchmarked to 100 as of March 2012.
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