Mortgage credit availability increased in March, opening the mortgage market up to more borrowers. This was driven by an improving economy and job market recovery.
The mortgage market is opening up and mortgage credit availability increased due to the recovering job market and economy.
The Mortgage Bankers Association’s Mortgage Credit Availability Index increased by 0.6 percent to 125.4 in March.
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.
Broken down by loan type, the Conventional MCAI increased 0.8 percent, while the Government MCAI increased by 0.4 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.5 percent and the Conforming MCAI rose by 0.2 percent.
“Credit availability inched higher in March, driven by the ongoing economic and job market recovery,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “This has increased the amount of low credit score and high LTV products. 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,” Kan said.
“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 minutes released Wednesday from the Federal Reserve’s March Federal Open Markets Committee (FOMC) meeting showed there is an expectation for a stronger economic recovery in the months and years ahead.
During its meeting, the FOMC noted that the economy has seen significant recovery over the past several months, including in GDP, employment, wages and more, however it has yet to reach pre-pandemic levels.