U.S. mortgage credit availability hits 2022 high

U.S. mortgage credit availability increased in October to its highest level since 2022, reflecting a gradual easing of lending standards and sustained demand for home loans.

The Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI) rose 2.8% to 105.6 in October, up from 102.7 in September. The index, which measures the availability of mortgage credit based on loan types and borrower qualifications, has now climbed for three consecutive months.

Analysts attribute the rise to lenders’ willingness to broaden credit criteria amid competitive market conditions. The increase was led by gains in conventional mortgage credit, which surged 3.5%, while government-backed loans saw a more modest gain of 1.2%.

"The uptick in credit availability suggests lenders are becoming more accommodating as they compete for borrowers in a still-active housing market," said Mike Fratantoni, MBA’s senior vice president and chief economist. "However, affordability remains a key constraint for many potential buyers."

The MCAI tracks changes in mortgage underwriting standards, with higher readings indicating greater credit availability. The index’s recent rise follows a period of tightening in late 2022 and early 2023, when higher interest rates and economic uncertainty led lenders to restrict credit.

Despite the improvement, the average 30-year fixed mortgage rate remains elevated at around 7.5%, according to Freddie Mac, which continues to weigh on housing affordability. The combination of higher rates and limited inventory has kept home sales subdued, even as credit conditions ease.

The MBA’s report underscores a cautious but notable shift in mortgage lending, with lenders balancing risk management against competitive pressures in a high-rate environment.