Mortgage Credit Availability Reaches Highest Level in Over Two Years

April 9, 2025 TruthUSA

The rise in availability coincided with mortgage rates remaining high, staying above the 6.5 percent mark.

Last month saw an increased availability of mortgage funds in the housing market compared to the previous month, largely driven by refinance programs, according to the Mortgage Bankers Association (MBA).

The Mortgage Credit Availability Index, which assesses the availability of mortgage credit at a given point in time, “increased by 2.5 percent to 102.9 in March” from February, as reported by the MBA in a statement on April 8 statement. An increase in the index signifies a relaxation of credit conditions.

Joel Kan, MBA’s vice president, noted that credit availability has reached its highest level since January 2023. He attributed this growth to “a rise in cash-out refinance programs, as recent volatility in mortgage rates has provided an opportunity for some borrowers to refinance.”

A cash-out refinance enables a homeowner to secure a larger mortgage loan, use a portion to pay off the existing mortgage, and retain the remainder for personal use.

“The growth in credit supply was predominantly seen in conventional programs, with jumbo availability at its highest point in five years,” Kan stated.

A conventional loan refers to a mortgage that adheres to the limits set by the Federal Housing Finance Agency, while a jumbo loan exceeds those limits.

Despite the improvement in mortgage credit availability, overall mortgage applications have not shown favorable results. In the week ending March 28, applications declined by 1.6 percent.

These disappointing application figures come at a time when mortgage rates remain high. The average weekly rate for a 30-year fixed-rate mortgage has been lingering above 6.5 percent since mid-October.

On a positive note, mortgage applications for purchasing homes are at their highest level since late January, according to Kan.

“Overall purchase activity has experienced year-over-year growth for over two months as the inventory of existing homes for sale continues to rise, a favorable trend for the housing market despite the uncertain near-term outlook,” he commented.

Real estate platform Zillow stated that forecasting the trajectory of mortgage rates is currently challenging.

“In the medium term, barring any significant data softness, Zillow anticipates mortgage rates to end the year around the mid-6 percent range,” they mentioned.

Constrained By Regulations

During recent testimony presented to Congress, Buddy Hughes, chairman of the National Association of Home Builders (NAHB), advocated for the removal of excessive regulations to alleviate the housing affordability crisis in the United States.

He pointed out that the residential construction sector is one of the most stringently regulated industries and that excessive regulations hinder the efforts of home developers striving to tackle the housing crisis.

“Regulatory expenditures, which encompass adherence to building codes, zoning complications, permitting impediments, and other costly barriers, account for nearly 25 percent of the cost of constructing a single-family house and over 40 percent of the cost of a typical apartment,” Hughes stated. “Congress and the Trump administration must explore options to reform the regulatory process while eliminating unnecessary regulations to enable more Americans to achieve homeownership and create more affordable rental opportunities.”

As per a March 10 report from the real estate listing site Realtor, the housing supply gap in America stood at 3.8 million units last year, marking the third-largest annual figure since 2012.

“At the current construction rate for 2024 in relation to household formations and pent-up demand, it would take approximately 7.5 years to close the housing gap,” the report indicated.

The company attributed this situation to real estate zoning laws and other restrictions, arguing that such regulations inhibit new construction that could help alleviate the supply crisis.

The report emphasized that building new homes would benefit the housing market, particularly for younger households.

“An increase in home supply translates to lower prices, potentially leading to higher home sales,” it concluded.

Last month, Interior Secretary Doug Burgum and Housing and Urban Development Secretary Scott Turner announced a collaborative task force dedicated to utilizing underutilized federal lands suitable for housing to boost the market supply and reduce costs.

In a March 17 post on the social media platform X, Turner highlighted the urgent need for 7 million affordable homes, underscoring that 20 percent of the United States’ landmass is owned by the Department of the Interior.

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