There was more money available for borrowing in November, according to the Mortgage Bankers Association, but Americans did not take advantage of it to buy new homes, with the number of new home loan applications tanking during the same time.
“Credit availability increased in November, largely due to the addition of jumbo loan programs that permit cash-out refinancing,” said Mike Fratantoni, MBA’s Chief Economist in a statement. “Home price appreciation and larger equity cushions have likely made some lenders more willing to allow certain borrowers to take cash out, while still low mortgage rates may make this a more attractive opportunity for some.”
The MBA’s Mortgage Credit Availability Index rose 1.2 percent to 114.6 in November, a sign that lending standards were easing. The index was benchmarked in March 2012 at 100.
“Following strong new home sales in October, our data shows November sales volume dropped significantly,” said Mike Fratantoni, MBA’s Chief Economist. “Average loan size increased to almost $307,000 in November from roughly $300,000 in October, indicating that builders are having greater success with higher priced homes and difficulty at the entry level, as first-time buyers continued to face tight credit conditions.”
Sales of new single-family homes fell to a seasonally adjusted annual rate of 401,000 units in November, down 13 percent from October’s 461,000 home sales pace.
Even though credit standards have loosened for borrowers in general, until mortgage credit becomes more widely available for first-time home buyers again, home sales will likely continue to drag and the housing recovery will lack full momentum.