Mortgage Credit Increased in May But Remains Well Below Pre-Pandemic Levels


Mortgage credit availability increased in May, rising 1.4% compared with April to a score of 129.9 on the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).

Credit availability for conventional loans increased 3.5%, while credit for government loans decreased by 0.3%.

Within the conventional realm, credit for jumbo loans increased by 5.1%, while credit for conforming loans rose by 1.6%.  

A decrease 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. 

“Mortgage credit availability in May increased to its highest level since near the start of the pandemic, but still remained at 2014 levels,” says Joel Kan, associate vice president of economic and industry forecasting, in the report. “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.

“The jumbo index jumped 5 percent last month, but even with increases over the past two months, the index is still around half of where it was in February 2020,” Kan adds. “A rapidly improving economy and job market has freed up jumbo credit, as banks have deposits to utilize.

“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.”

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