Increase in ARM and non-QM options comes as borrowers adapt to the high-rate environment
Mortgage credit supply posted a modest uptick in September, with lenders adding more ARM and non-QM options to their loan offerings to adapt to the evolving needs of borrowers grappling with rising mortgage rates.
The Mortgage Credit Availability Index (MCAI) edged up 0.6% to 97.2 in September, according to data from the Mortgage Bankers Association. The increase indicates lenders have loosened their credit standards.
“Credit availability increased slightly in September, as lenders increased their loan offerings marginally to meet the changing needs of borrowers who are facing higher mortgage rates,” said Joel Kan, MBA’s deputy chief economist. “There were more loan programs for ARM (adjustable-rate mortgage) loans for borrowers seeking lower initial monthly payments and also some increases in non-QM product offerings. Credit availability increased across all loan categories, with the jumbo index increasing for the second straight month, driven by the expansion of ARM and non-QM offerings.”
Both the Conventional and Government MCAIs rose 0.6% last month. Of the components of the Conventional index, the Jumbo MCAI was up by 0.8%, and the Conforming MCAI climbed 0.2%.
“Industry capacity has declined significantly since the peak originations months in 2021, and MBA expects to see further declines in originations volume, given the high-interest rate environment and typical seasonal slowdown,” Kan added.
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