US mortgage credit supply boosted by non-QM jumbo loans

Jumbo credit availability reaches highest level since March 2020

US mortgage credit supply boosted by non-QM jumbo loans

Mortgage credit availability increased for the third consecutive month in September as lenders pushed more non-QM jumbo loan products into the market, according to the Mortgage Bankers Association.

MBA's Mortgage Credit Availability Index (MCAI) edged up 1.5% to 125.6 in September, indicating that lending standards are loosening. Joel Kan, AVP of economic and industry forecasting at MBA, noted that credit availability remained below pre-pandemic levels.

"Last month's expansion was driven by a 4.5% increase in the conventional index, while the government index slightly decreased," he said. "Even with increases in seven out of nine months thus far in 2021, total credit availability is still around 30% less than it was in February 2020 before the pandemic." 

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The Conventional MCAI rose 4.5%, while the Government MCAI dropped by 0.7%. Of the component indices of the Conventional MCAI, the Jumbo MCAI grew by 5.8%, and the Conforming MCAI climbed by 2.6%. 

"We are still seeing elevated rates of home-price appreciation, and lenders are responding by offering a wider range of loans to accommodate qualified buyers," Kan said. "Jumbo credit availability increased almost 6% to its highest level since March 2020, with more loan programs for non-QM jumbos and loans catering to self-employed borrowers or those with non-traditional sources of income.

"The conforming index indicated a greater supply of loans for cash-out refinances, investor properties, and adjustable-rate mortgages (ARMs). Even as mortgage rates continue to rise, cash-out refinances remain an option for borrowers who have sufficient home equity and need additional cash."