MBA: Mortgage lending loosens up a bit
Mortgage Credit Availability Index inches up 0.7%
Mortgage credit availability started to expand in October even though underwriting standards remained high against historic standards, the Mortgage Bankers Association concluded in its Mortgage Credit Availability Index.
The index inched up 0.7% to a score of 111.5 in October after two consecutive months of declines in August and September, suggesting a loosening of mortgage credit.
"We have seen a steady loosening in an incremental way since the beginning of the year," said Jonathan Corr, Ellie Mae's president and chief operating officer.
The average FICO score on new loans fell from 750 at the beginning of the year to around 732 in September, Corr explained.
This slight fluctuation stems from investors reducing the minimum credit score requirements on certain products.
Other investors reduced the availability of cash-out refinances and limited other programs to primary residences in programs, equating to a slight increase for the month.
Additionally, Corr said, "We have seen a significant rise in the percentage of loans with a credit score under 700."
In September, 32% of all loans closed had credit scores less than 700, compared to less than 17% a year ago.
"All of these are indicators that credit is loosening somewhat. Not drastically but we are going in the right direction," Corr added.