Mortgage credit availability increased 2% in January compared with December, reaching a score of 124.6 on the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).
Credit availability for conventional loans increased 4.8%, compared with the previous month, while credit for government loans decreased 0.1%.
Credit for jumbo loans increased 2.2%, while credit for conforming loans increased 7.7%.
“The growth in credit availability in January coincides with a housing market that is poised for a strong start to the year,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Improvements were driven by the conventional segment of the mortgage market, as lenders added ARM loans with lower credit score and higher LTV requirements.”
“Despite ARM loans accounting for a very small share of loan applications in recent months, lenders are likely looking ahead to a strong home buying season by expanding their product offerings,” Kan says.
He adds that “ongoing strength in home-purchase applications and home sales continue to signal robust housing demand, even as low housing inventory remains a constraint. However, even with overall credit availability picking up in three of the past four months, credit supply is still at its tightest level since 2014.”
The report analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.
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.