Lending standards overall loosened during March, the Mortgage Credit Availability Index (MCAI) from Mortgage Bankers Association (MBA) and Ellie Mae indicates.
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etcetera). The latest MCAI rose by 0.6% to 125.4 in March.
"Credit availability inched higher in March, driven by the ongoing economic and job market recovery. This has increased the amount of low credit score and high LTV products," Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting said. "All the market segments covered by our sub-indexes increased over the month, notably government and jumbo indexes. The government index, which includes FHA, VA, and RHS mortgages, increased for the sixth time in seven months to its highest level in a year. As we look ahead to the expected growth in the purchase market, which will be driven by millennials and first-time home buyers, credit availability to qualified borrowers will play an important role in supporting this demand."
Added Kan, "Jumbo credit supply increased for the sixth consecutive month, a strong rebound after many lenders pulled back in the first half of 2020 at the onset of the pandemic. Jumbo availability is increasing again as the economy regains its footing and coincides with the strong demand for homebuying and accelerated home price growth in many markets."
The Total MCAI has an expanded historical series that gives perspective on credit availability from the last 10 years. It was created to provide historical context to the current series by showing how credit availability has changed, including during the housing crisis and ensuing recession.
Learn more about the MCAI at mba.org [1].