Mortgage Credit Availability Shrank In November

Mortgage credit availability shrank in November, falling by 0.6% to 124.9, according to the Mortgage Banker Association’s (MBA) Mortgage Credit Availability Index (MCAI).

The Conventional MCAI rose by 1.9% but was offset by the Government MCAI dropping 2.7%. Within the Conventional MCAI, the Jumbo MCAI rose by 3% and the Conforming MCAI rose by 0.2%.

The decline comes on the heels of a four-month period of mortgage credit growth.

“Credit availability in November was down slightly, even as the housing market continues to thrive amidst the improving job market. However, the picture was different depending on the market segment. An increase in conventional credit availability was offset by a decrease in government credit, as lenders reduced their offerings of government loan programs with lower credit scores, as well as those for investment homes. Credit supply for jumbo loans increased for the fifth straight month. Lenders scaled back on jumbo supply at the onset of the pandemic, and even with the recent growth in credit availability, the jumbo index remains more than 40% below February 2020 levels,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. 

“As home-price growth continues, and mortgage rates creep higher, increased credit availability is needed for qualified borrowers looking to purchase a home – especially for first-time homebuyers, who rely heavily on government mortgage programs.”

Soaring home prices have prompted concerns about the economic futures of Millennials entering their 30s, prime homebuying age. Millennials spend more of their monthly income on homeownership costs than other generations and are at the greatest risk of becoming house-rich and cash-poor.

Mortgage giants Fannie Mae and Freddie Mac have raised their limits on government-backed loans to $647,200 in most of the country and nearly $1 million in some high-cost communities. Both companies will be able to back loans of over $970,000 in high-cost areas like New York, San Francisco, Washington, DC, and Los Angeles.

“It is a big bump,” Melissa Cohn, regional vice president at William Raveis Mortgage, told CNN.

“But it would make conforming loans possible for a lot of people who never had access before. Many people in New York City never had the opportunity to take advantage of the benefits of conforming loans.”