Mortgage credit availability increased slightly in August but remained close to the very low levels last seen in January 2013, according a report from the Mortgage Bankers Association.
Overall, an increase in the number of loan programs offering cash-out refinances and mid-range credit scores drove the uptick, said Joel Kan, MBA’s vice president and deputy chief economist.
The trade group’s monthly Mortgage Credit Availability Index picked up by 0.3% to 96.6 in August. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.
As lenders seek to reduce costs, by cutting down on staff and streamlining product offerings, industry capacity continues to decline, noted Kan.
Industry professionals also winded down on their product offerings. The conforming index dropped to its lowest level since 2011. However, the jumbo index, increased after three monthly declines, indicating that the current context provided lenders with some new opportunities, said Kan.
This news comes after a year in which the nation’s largest banks, spooked by surging rates and increased regulatory risks, have shied away from the jumbo mortgage market. HousingWire covered the jumbo downturn extensively in August.
Meanwhile, the Conventional MCAI, which does not include loans backed by the government, increased 0.6% and the Government MCAI, which examines FHA, VA, and USDA loan programs, was unchanged.
Of the two component indices of the conventional index, the Jumbo MCAI increased by 2.7%, while the Conforming MCAI fell by 2.7%.
Source: housingwire.com