US Mortgage Credit Availability Rises in September

On Thursday, the Mortgage Bankers Association (MBA) reported that mortgage credit availability rose in September, according to its Mortgage Credit Availability Index (MCAI).

The MCAI rose 0.4% to a reading of 104.4. A decline in the MCAI indicates tighter lending standards, while increases indicate looser credit. The index was benchmarked to 100 in March 2012.

The Conventional MCAI increased 0.1%, while the Government MCAI rose 0.8%. Within the Conventional MCAI, the Jumbo MCAI decreased 0.1%, and the Conforming MCAI rose 0.7%.

Commenting on the report, MBA Vice President and Deputy Chief Economist Joel Kan said:

“Mortgage credit availability increased to its highest level in four months, driven by a growing supply of ARM loans, both in terms of more ARM products and broader eligibility requirements. The ARM share of applications has moved higher recently because ARM loan rates remain around 80 basis points lower than fixed-rate loans. Because bank funding costs are more sensitive to Federal Reserve rate cuts than fixed-rate mortgage rates, it is not surprising to see more ARM offerings.”