October sees highest mortgage credit availability since 2022

"Joel Kan, MBA's vice president and deputy chief economist, noted that October's credit availability level was the highest seen since 2022 due to investors broadening their loan offerings. The increase was driven by growth in conventional mortgage credit availability, while government credit supply changed little, Kan added. A greater number of ARM and cash-out refinance loan programs contributed to credit supply growth, although the programs were mostly limited to higher credit score borrowers."

"A steeper yield curve, leading to a bigger differential between fixed-rate mortgage rates in comparison to ARM loan rates, has increased the popularity of ARMs in recent months. Additionally, more non-QM programs supplemented the increase in the jumbo index to its highest level since 2020. The conventional, government, conforming and jumbo MCAIs use the same methodology as the larger MCAI index. They measure relative credit risk and availability within their loan categories."

October credit availability reached its highest level since 2022 as investors broadened loan offerings. Growth was driven by conventional mortgage credit availability, while government credit supply changed little. A greater number of adjustable-rate mortgage and cash-out refinance programs contributed to credit supply growth, although most programs were targeted to higher-credit-score borrowers. A steeper yield curve widened the spread between fixed-rate mortgage rates and ARM rates, boosting ARM popularity. Expansion of non-qualified mortgage programs helped lift the jumbo MCAI to its highest level since 2020. The MCAI family measures relative credit risk and availability across conventional, government, conforming, and jumbo categories and includes a historical series back to 2004.

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