Housing Market

Lenders loosen mortgage credit for third consecutive month in February

MortgageData released by the Mortgage Bankers Association on Tuesday showed mortgage availability increased for the third consecutive month, indicating lenders are more willing to extend credit to borrowers.

Mortgage credit availability increased 0.44 percent in February to reach 113.5 on the MBA’s mortgage credit availability index, though the MBA said the level was far below the estimated level of 800 in 2007.

“For the third month in a row, mortgage lenders and investors slightly expanded credit offerings in February on net, as a result of offsetting factors,” MBA Chief Economist Mike Fratantoni said. “There was significant pull-back among 3/1 ARM programs. The recently implemented qualified mortgage/ability-to-repay sections of the new CFPB regulations stipulate that ARM loans must qualify at the highest allowable rate for the first five years of the loan. Many investors have discontinued loans whose interest rate adjusts after only three years (also known as 3/1 ARMs).”

The increase comes after a 1.85 percent increase in the indicator in January and 0.6 percent increase in December.

“While there was significant pull-back on these 3/1 programs, lenders and investors added several new 5+ year ARM programs, including those for jumbo loans, to their repertoire, resulting in a net increase to the MCAI,” Fratantoni said.

Comments are closed.