The ongoing economic recovery and improving labor market led to a rise in credit supply.

Mortgage credit availability increased in October after falling to a six-year low in September, the Mortgage Bankers Association reported. The MBA Mortgage Credit Availability Index rose by 2.3 percent to 121.3 in October. The Conventional MCAI increased by 5.1 percent, while the Government MCAI increased by 0.2 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 6.1 percent and the Conforming MCAI rose by 4.1 percent. “Credit availability increased in October for the first time since July,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The ongoing economic recovery and improving labor market led to a rise in credit supply for various loan types. There was an overall increase in credit availability for low credit score and higher LTV loans, with conventional credit supply increasing 5.1 percent and government credit staying essentially flat.” Kan noted despite October’s slight turnaround, credit availability remains constrained to near a low last seen in 2014. “After seeing a drop in supply of around 60 percent since the onset of the pandemic, the jumbo index rebounded 6.1 percent in October to its highest level since July of this year,” he said. “There was also an increase in ARM loan supply, likely driven by the GSEs’ September 30 deadline for LIBOR ARM loan applications. More lenders rolled out SOFR ARMs following the deadline.”

Source: The Mortgage Bankers Association