Written by: Internal Analysis & Opinion Writers
Mortgage credit availability surged in May, reaching its highest level since August 2022. The uptick signals that lenders are increasingly willing to loosen underwriting standards, providing borrowers with greater access to financing options during the spring homebuying season.
The Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI) rose by 2.1% to a reading of 105.1 in May, marking the strongest increase this year. This index reflects the relative ease or difficulty of securing a mortgage. A higher number indicates that lenders are expanding access to credit by approving a broader range of loan products and borrower profiles.
Both the conventional and government lending markets contributed to the rise. The conventional loan index reached its highest level since June 2022, while government loan availability—covering FHA, VA, and USDA mortgages—hit its strongest mark since November 2023.
Government loan programs saw the most notable growth, with a 2.9% increase in credit availability. This was driven by an expansion in FHA loan offerings, an uptick in VA adjustable-rate mortgage products, and greater access to streamline refinancing options. These programs are particularly important for first-time buyers and lower-income borrowers who benefit from more lenient requirements and lower down payments.
Conventional loan products also gained ground. Jumbo loans, which are used for loan amounts exceeding the conforming limit of \$806,500 in most markets, saw a 2.1% rise in availability. Conforming conventional loans—those meeting standard GSE underwriting criteria—were up by 0.5%. The increase in jumbo loan activity suggests that lenders are becoming more comfortable issuing loans to high-credit borrowers seeking larger homes or properties in more expensive markets.
The report also showed a rebound in non-qualified mortgage (non-QM) lending. These loans fall outside the boundaries of traditional qualified mortgage rules and often cater to borrowers with complex income scenarios, such as self-employed professionals or those with recent credit events. The growing presence of non-QM products reflects broader lender confidence in managing non-standard risk.
May’s gains follow a 2.5% jump in March and a flat reading in April, reinforcing the trend that lenders are cautiously opening their credit boxes in response to a stable, if not fully recovered, housing market. With affordability still strained by high mortgage rates, expanding access to more flexible mortgage programs could help offset some of the challenges facing potential homebuyers.
The timing is significant. Spring typically represents the busiest season for home sales, and the increase in credit access may support more transaction volume at a time when demand is beginning to pick up but remains well below pre-pandemic levels. While high rates continue to cool overall housing activity, incremental improvements in financing availability could help boost both purchase and refinance segments.
Still, credit availability has not returned to pre-pandemic highs. During the height of the housing boom, lenders were more aggressive in offering a wide range of products, including some with lower documentation requirements and minimal credit overlays. Today’s increases represent a modest but meaningful shift in a more risk-aware post-COVID lending environment.
Analysts note that lenders are still being selective. Underwriting remains rigorous, and many institutions are focused on expanding options within safe, regulated parameters. For example, many of the new programs being rolled out are government-backed or tailored to borrowers with strong compensating factors, such as higher credit scores or substantial cash reserves.
Looking ahead, the direction of credit availability may hinge on broader economic indicators—particularly inflation and interest rates. If inflation continues to ease and the Federal Reserve shifts toward a more accommodative stance later in the year, additional credit loosening could follow. On the other hand, renewed economic uncertainty or financial market stress could prompt lenders to pull back again.
For now, the latest data point to a mortgage market that is cautiously thawing. Borrowers with solid financial profiles—especially those seeking government-backed loans, jumbo mortgages, or non-QM solutions—are likely to find more options available than they did just a few months ago. That trend could make a crucial difference as the housing market works to regain its footing.
