Credit diverges: Jumbo rises, FHA slips Government loan performance issues prompted tighter underwriting in the past month, but credit availability expanded in other parts of the market, according to a Mortgage Bankers Association analysis. Availability in the jumbo sector, which includes loans made outside of the regulatory definition for a standard "qualified mortgage," expanded 2.9%, the Mortgage Credit Availability Index shows. In contrast, government loan credit availability contracted 0.8%. The two categories represent opposite ends of the spectrum that have become particularly important to watch on the index, which is based on an analysis of ICE Mortgage Technology's data and registered a collective increase of 1.1% to 107.1 for all loan products. "The jumbo index increased by 3% for the second straight month, again driven by growth in non-QM loan programs," said Joel Kan, MBA's vice president and chief economist, in a press release. Higher Federal Housing Administration delinquencies likely led to government sector contraction, he said, noting that most of the past month's stemmed from cash-out refinance and investor loans, with limits on loan-to-value ratios. Underwriting factors to watch include a focus on home equity, which has built up significantly. "We have this tremendous build up in home equity, and that will help us weather any type of storm, whether that's an economic downturn, whether it's increases in property taxes and insurance, it will help," Walsh told attendees at the MBA's mortgage servicing conference last month. "Certainly we have affordability issues, but particularly for those borrowers who originated a loan during the pandemic, or before this home equity accumulation, it will certainly help temper ramifications of any type of economic downturn," she added.#mortgage_bankers_association #ice_mortgage_technology #joel_kan #fhfa #kbra
