Are record-low interest rates masking high-cost mortgage lending?

Are record-low interest rates masking high-cost mortgage lending?

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MBA: Credit loosens as more jumbo products come to market


Mortgage credit availability increased in May as the industry slightly loosened the reigns on standards.

The Mortgage Bankers Association posted that the Mortgage Credit Availability Index rose 1.14% from 113.8 in April to 115.1 in May.

A decline in the MCAI shows that lending standards are tightening, compared to an increase, which shows a loosening of credit.

The MBA partially attributed the slight loosening to an increase in the availability of jumbo loans. Another reason was the action by some investors to lower credit score requirements on FHA loans.    

And these results can be seen in the industry.

BOK Financial Mortgage noted that it continues to see credit availability increases predominantly with non-conforming mortgage products. 

“The impetus for this credit expansion has been the improvement in real estate values, economy and credit quality of borrowers,” Chris Garagusi, vice president, mortgage capital markets product manager with BOK Financial Mortgage, said.

Garagusi explained that in February 2014, BOK Financial Mortgage introduced a 90% LTV non-conforming product set to $1,000,000 within its retail channel.

In addition, the mortgage firm made enhancements to its simultaneous second mortgage product, which allows for a CLTV up to 90%, bringing more options to the market as products succeed.  

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