October residential financing credit on the rise
Posted on Wednesday, November 13, 2013 at 11:03:47 AM
Lending standards often shift throughout the year. One key indicator of this is mortgage credit availability, and a recent report by the Mortgage Bankers Association found that it increased during October.
This aspect of residential financing relates closely to lending standards, according to the MBA. A declining trend means that standards are tightening, while the other direction is more indicative of loosening. Therefore, the current upward direction points to this.
For October, the MBA reported that the Mortgage Credit Availability Index grew 0.7 percent to a total of 111.5. This change is in contrast to the previous two months, since August and September both had reported declines.
Based on past history, credit is still relatively tight. That means some people could find difficulty acquiring residential financing, but this current trend could be perceived as good news. For example, the MCAI was benchmarked to 100 in 2012, the MBA noted. However, if the figure was followed in 2007, it would have been near 800.
According to CNBC, mortgage changes - like fewer refinances and higher interest rates - could have resulted in some lenders easing up on their standards. These changes could be several reasons as to why current credit availability is on the rise.