Mortgage credit availability did little to crawl
back to pre-pandemic levels last month. The Mortgage Bankers Association said
its Mortgage Credit Availability Index (MCAI) inched up only 0.1 percent in
October to 125.7. A decline in the MCAI indicates that lending standards are
tightening, while increases in the index are indicative of loosening credit. Two
of the MCAI’s component index were flat while the remaining two did make large and
offsetting changes. The Conventional MCAI increased 0.1
percent, while the Government MCAI was unchanged. Of the component indices of
the Conventional MCAI, the Jumbo MCAI increased by 4.1 percent, and the
Conforming MCAI fell by 6.0 percent. “Credit availability inched forward in October,
but the overall index was 30 percent lower than February 2020 and close to the
lowest supply of mortgage credit since 2014,” said Joel Kan, MBA’s Associate
Vice President of Economic and Industry Forecasting. “Within the subindexes, a
4 percent increase in the jumbo index was essentially offset by a 6 percent
drop in the conforming index. There was an increase in the supply of jumbo ARM and
non-QM products, which drove most of the increase in the jumbo index. On the
conforming side, there was a pullback in ARMs, higher LTV loans, and lower
credit score products. While there is tightening in ARM credit availability
both for jumbo and conforming loans, ARM loans have accounted for a small share
of loan applications, ranging from 2.5 percent to 5 percent of applications to
date in 2021.”

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