Jumbo loans drive increase in mortgage credit in September

MBA’s jumbo index hits record high

Mortgage credit availability loosened in September, driven by an increase in jumbo loans, according to the Mortgage Bankers Association’s Mortgage Credit Availability Index, which analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool.

The MCAI rose by 0.9% to 183.4 in September. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.

The Conventional MCAI increased by 2.4%, while the Government MCAI increased 0.6%. But the Jumbo MCAI saw the largest increase as it rose by 4.7%. The Conforming MCAI fell by 1.1%.

“Credit availability increased slightly in September, driven by a 5% increase in the supply of jumbo loans,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “The jumbo index, which grew from a combination of lower credit score requirements, non-QM loans, and investor products, is now at a record high since tracking began in 2011. Meanwhile, the trend of tightening credit availability in conforming and government programs continued over the past few months, as both indices decreased.”

In fact, earlier this year, the appetite for jumbo loans increased as jumbo credit availability rose to an 8-year high. Back in May, reports showed investors were turning their eye on jumbo, non-QM loans in a race to remain competitive.

Non-QM is predicted to continue rising, poised for 400% growth in 2019, according to the annual Origination Solutions Survey from Altisource Portfolio Solutions, and a continued surge is expected in 2020.

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