Lenders are courting independent borrowers again
Mortgage credit availability increased for the third consecutive month in September, but is still 30% below pre-pandemic levels, according to a report released Tuesday by the Mortgage Bankers Association (MBA). Much of the growth in credit availability is due to loans to independent borrowers, which were left out by most lenders during the pandemic.
The MBA Mortgage Availability Index overall rose 1.5% to 125.6 in September, its highest level since May. The index stands at 100 in March 2012; a higher number suggests greater availability of mortgage credit.
According to Joel Kan, associate vice president of economic and industrial forecasting at MBA, despite high rates of home price appreciation, lenders are offering a wider range of loans to accommodate qualified buyers.
“But, even with increases in seven out of nine months so far in 2021, total credit availability is still about 30% lower than it was in February 2020,” he added.
The conventional MCAI increased by 4.5%, while the government MCAI decreased by 0.7%. Among the constituent indices of the conventional index, the jumbo MCAI rose 5.8%, the highest level since March 2020, and the conforming MCAI rose 2.6%.
How brokers can help today’s single borrower
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“Jumbo credit availability has increased with more loan programs for non-QM jumbos and loans aimed at independent borrowers or those with non-traditional sources of income,” Kan said.
Kan added that the compliance index indicated a greater supply of loans for cash refinances, investor properties and variable rate mortgages (ARMs).
“Even as mortgage rates continue to rise, cash refinances remain an option for borrowers who have sufficient home equity and need additional cash.”
According to Freddie macAccording to the latest PMMS survey, the 30-year average fixed mortgage rate fell back to 2.99% for the week ending October 7. The week before, rates had crossed the 3% mark for the first time since June.