May Mortgage Credit Availability Increases by 1.4%

Mortgage credit availability increased in May to its highest level since the onset of the coronavirus pandemic, but remained well below its 2019 peak levels, the Mortgage Bankers Association reported Thursday.

The MBA Mortgage Credit Availability Index, which analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool, rose by 1.4 percent to 129.9 in May. The Conventional MCAI increased by 3.5 percent, while the Government MCAI decreased by 0.3 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 5.1 percent and the Conforming MCAI rose by 1.6 percent.

“Mortgage credit availability in May increased to its highest level since near the start of the pandemic, but still remained at 2014 levels,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The increase was driven by a 3 percent gain in the conventional segment of the market, with a rise in the supply of ARMs and cash-out refinances. This is consistent with the uptick in mortgage rates and a slowing refinance market, as well as MBA’s Weekly Applications Survey data showing increased interest in ARMs.”

Kan noted the Jumbo index jumped 5 percent last month, but even with increases over the past two months, the index is still just half of where it was in February 2020. “A rapidly improving economy and job market has freed up jumbo credit, as banks have deposits to utilize,” he said. “However, there is still plenty of restraint, as many sectors have not fully returned to pre-pandemic capacity, and there are around 2 million borrowers still in forbearance.”

A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.

About the Mortgage Credit Availability Index

The MCAI provides the only standardized quantitative index solely focused on mortgage credit.

The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for more than 95 lenders/investors are combined by MBA using data made available via the AllRegs Market Clarity product and a proprietary formula derived by MBA to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time.  Base period and values for total index is March 31, 2012=100; Conventional March 31, 2012=73.5; Government March 31, 2012=183.5.

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