Credit Availability Up In Response To High Equity

Mortgage credit availability rose by 1.5%, according to the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI). This is its highest level since May 2021. The index analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.

The MCAI rose to 125.6, with the Conventional MCAI increasing 4.5% while the Government MCAI fell by 0.7%. The Jumbo MCAI rose by 5.8% and the Confirming MCAI rose by 2.6%.

“Last month’s expansion was driven by a 4.5 percent increase in the conventional index, while the government index slightly decreased. Even with increases in seven out of nine months thus far in 2021, total credit availability is still around 30 percent less than it was in February 2020 before the pandemic,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

He added that lenders are taking note of rising home price appreciations and in turn offering a wider array of loans.

“Jumbo credit availability increased almost 6 percent to its highest level since March 2020, with more loan programs for non-QM jumbos and loans catering to self-employed borrowers or those with non-traditional sources of income. The conforming index indicated a greater supply of loans for cash-out refinances, investor properties, and adjustable-rate mortgages (ARMs),” he said.

Homeowner equity grew $2.9 trillion since Q2 2020, up 29.3%. That shakes out to $51,500 in gains for the average borrower. High tappable equity gives homeowners an array of economic options, according to Thomas Sponholtz, CEO and Chairman of Unison, a co-investing company.

“Homeowners are participating in one of the biggest wealth-building moments we’ve seen in residential real estate. The record levels of tappable equity they’re accumulating give them a lot of options, whether they’re eyeing retirement or renovation,” he said.