Mortgage credit loosens in May, as lenders add ARMs, cash-out refis – About Your Online Magazine

Lenders increased their availability of mortgage credit for the third straight month in May, helped by conventional lenders adding adjustable rates ​​along with cash-in refinancing products, said the Mortgage Bankers Association.

The mortgage loan availability index for May rose to 129.9 from 128.1 in April and 129.3 in May 2020, the second consecutive month that mortgage lenders have reduced their product supply because of the pandemic.

Even with the increase this month, the availability of credit remained at the levels recorded in 2014. For comparison purposes, in February 2020, in the last month before creditors began to tighten credit because of the pandemic, the MCAI was 181.3.

The conventional segment of the index advanced 3.5% compared to April. “This is consistent with rising mortgage rates and a slowing refinance market, as well as data from the MBA’s Weekly Apps Survey showing increased interest in ARMs,” said Joel Kan, associate vice president of economic and forecasting. industry, in a press release.

The jumbo portion of the conventional index rose 5% on a month-to-month basis, but was still halfway from where it was in February 2020, he noted.

“A rapidly improving economy and job market has unleashed huge credit as banks have deposits to use,” Kan said. “However, there is still a lot of contention as many sectors have not fully returned to pre-pandemic capacity and there are about 2 million borrowers still in tolerance.”

Meanwhile, the compliant portion of the conventional index rose 1.6% in May compared to April. For the first time since January, there was a monthly drop in the government’s MCAI, retreating 0.3% in May.

Across the board – for compliant, non-conforming and jumbo products – Fannie Mae’s respondents Second Quarter Mortgage Lender Opinion Poll they were neutral as to whether credit has tightened or slackened in the previous three months or will be in the next three months.

But there was a slight trend for credit for non-performing and government mortgages to ease in both the past three and the next three months in the results. However, for conforming mortgages, the bias tended to harden.

Paula Fonseca