The Mortgage Bankers Association (MBA) reports [1] that nationwide, mortgage credit availability increased in December 2021 according to its the Mortgage Credit Availability Index (MCAI).
The MCAI rose by 0.8% to 125.9 in December. 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. The Conventional MCAI increased 0.8%, while the Government MCAI rose by 0.7%. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.6%, and the Conforming MCAI rose by 1.1%.
"Credit supply increased in December, with growth across both conventional and government segments of the market,” said Joel Kan [2], MBA's Associate VP of Economic and Industry Forecasting. The overall credit index increased to its highest level since May 2021, but remained 30% below its pre-pandemic level. December's growth was driven by more ARM and lower credit score loan programs, which was likely due to a combination of the rising rate environment and affordability challenges. Lenders expanded offerings to qualified borrowers who were the most impacted by these market conditions. Additionally, there was an increase in government streamline refinance programs to aid borrowers still looking to refinance before rates rise even more."
Affordability issues continue in the market, as inventory and supply chain concerns weigh on home buyers nationwide. Added to the mix is the drastic rise in mortgage rates, as last week, Freddie Mac reported rates returning to pre-pandemic levels of 3.45% [3].
The National Association of Home Builders (NAHB) reports [4] that, over the past four months, lumber prices have nearly tripled, forcing the price of an average new single-family home to rise by more than $18,600. According to Random Lengths [5], a firm that gauges price behaviors in the U.S. framing lumber market, as of December 29, 2021, the price of framing lumber topped $1,000 per thousand board feet—a 167% increase since late August.
"The overall supply of mortgage credit only grew around 3% compared to the same month a year ago, with a 34% increase in jumbo credit availability contributing to most of that growth,” said Kan. “Government credit supply, as well as conforming credit, saw tightening last year."