Last June, mortgage credit availability was slightly up, an indication of looser lending standards, according to the Mortgage Bankers Association. Coincidentally, consumers showed more optimism in getting a mortgage last month per a separate housing index by Fannie Mae.
Mortgage Credit Availability Slightly Looser
The MCAI, short for Mortgage Credit Availability Index, showed an overall increase of 0.1 in June, totaling 178.5. This index consists of four indices whose performance or availability last month was as follows:
- Conforming MCAI and Conventional MCAI rose 0.9% – the highest increase seen during the covered period.
- Jumbo MCAI climbed 0.8% – the second highest increase seen during the month.
- Government MCAI slowed down 0.4% compared to the preceding month.
Lynn Fisher, vice president of research & economics at MBA, said of June MCAI results: “Mortgage credit availability increased slightly by 0.1 percent in June lifted by expansion among jumbo loan programs and additional availability of affordable conforming loan programs.”
The MCAI is a proprietary tool used to measure mortgage credit based on various borrower eligibility factors such as loan type, credit score, loan-to-value ratio and underwriting standards from more lenders/investors.
Consumer Optimism, Seller’s Market on Fannie Mae’s June HPSI
“Consumers are also growing more optimistic about their ability to get a mortgage, and lenders expect credit standards to ease further going forward, as shown in our Mortgage Lender Sentiment Survey,” Doug Duncan, Fannie Mae’s senior vice president and chief economist, said in an accompanying statement.
Fannie Mae’s Home Purchase Sentiment Index® (HPSI) for the month of June recorded an increase of 2.1 percentage points, totaling 88.3. As Mr. Duncan pointed out, “The June HPSI reading matches the previous record set in February and reflects the trend toward a sellers’ market that respondents indicated last month.”
The HPSI rose from the increases shown by four out of six component questions. These are:
- “Good Time to Buy”. There was a 3% increase in the number of Americans who thought now is a good time to buy, to 30%.
- “Good Time to Sell”. A new survey-high – the number of Americans who responded that now is a good time to sell increased by 7%, to 39%.
- “Home Prices Will Go Up”. The share of consumers who expect home prices to go up in the next 12 months increased by 6%, to 46%.
- “Mortgage Rates Will Go Down”. As to the share of consumers who believe mortgage rates to decrease, there was a 3% increase, reaching (-49%).
- “Confidence About Not Losing Job”. Fewer Americans are concerned about losing their jobs, falling by 5%, to 76%.
- “Household Income Is Significant Higher”. The share of consumers who reported a significantly higher income compared to the past 12 months also decreased by 1%, reaching 17%.
The June HPSI matches that of the all-time high recorded housing sentiment in February 2017 and is 5.1 percentage points higher than a year ago. The Index measures consumers’ views and expectations about the housing market.
Justin McHood is a managing partner at Suited Connector and has been recognized by national media outlets as a financial expert for more than a decade.