Available mortgage credit sees first increase after 8-month low

Lending restrictions ease up a little in July

Available mortgage credit sees first increase after 8-month low

Mortgage credit availability posted its first increase in eight months – levelling off the sharp decline earlier this spring.

A report from the Mortgage Bankers Association showed that lending standards loosened up a bit in July. The Mortgage Credit Availability Index edged up by 1.5% to 126.9 last month with the Conventional MCAI and the Government MCAI up by 2.9% and 0.4%, respectively.

The components of the Conventional MCAI were both higher: the Jumbo MCAI rose by 5%, and the Conforming MCAI climbed by 1.2%.

"Credit availability rose slightly in July – the first increase in eight months – as the supply of certain types of adjustable-rate mortgages (ARMs) and jumbo loans increased," said Joel Kan, associate vice president of economic and industry forecasting at MBA. "The improvement was more of a leveling off from the precipitous drop earlier this spring.

However, credit availability remains 30% lower than 2019 levels and near its lowest level since 2014, according to Kan.

"The July data signals that lenders saw conditions improve this summer, as forbearance requests flattened, and record-low mortgage rates spurred strong levels of purchase and refinance activity," Kan said. "There's evidence the resurgence of COVID-19 cases has cooled the job market recovery, which may temper borrower demand and the overall improvement in the economy." 

The MCAI was benchmarked to 100 in March 2012 and is based on data analysis from Ellie Mae's AllRegs Market Clarity business information tool.