In December, the Mortgage Credit Availability Index (MCAI) edged up by 0.7%, signaling a slight loosening of lending standards. This increase, reported by the Mortgage Bankers Association (MBA), reflects improved opportunities for borrowers, particularly for certain loan types.
Understanding the MCAI
The MCAI measures mortgage credit availability and uses a benchmark score of 100, established in March 2012.
- Rising Index: Indicates loosening lending standards, making it easier for borrowers to access credit.
- Falling Index: Reflects tighter lending criteria, limiting borrower access.
In December, the index reached 96.6, marking a modest improvement from November.
Breakdown by Loan Type
- Conventional Loans:
- Credit availability increased by 1.3%.
- Growth driven by expanded offerings for adjustable-rate mortgages (ARMs) and cash-out refinances targeted at borrowers with strong credit profiles.
- Government Loans:
- Availability remained steady with no significant changes.
- Jumbo Loans:
- Credit availability rose by 2.3%.
- The jumbo index reached its highest point since August 2024, reflecting increased access for high-value property loans.
- Conforming Loans:
- Credit availability dipped by 0.7%.
- Indicates a slight tightening in loan criteria for this category.
Factors Driving the Changes
According to Joel Kan, MBA’s vice president and deputy chief economist, the modest rebound in credit availability was primarily influenced by:
- Increased offerings for ARMs and cash-out refinance products.
- Targeted focus on borrowers with stronger credit profiles.
Conclusion:
December’s rise in the MCAI underscores a gradual loosening of mortgage credit standards, with notable improvements in conventional and jumbo loan availability. Borrowers with strong credit profiles saw increased options, particularly for ARMs and refinance products.
