Mortgage credit availability decreased in June, according to the Mortgage Bankers Association's (MBA) Mortgage Credit Availability Index (MCAI). Overall, MCAI fell by 8.5% to 118.8 in June — a decline that indicates lending standards are tightening.
Joel Kan, MBA's associate vice president of economic and industry forecasting, said, "The reduction in credit availability came as a result of GSE policy changes which reduced the availability of high LTV refinance loans, impacting both conforming loans and GSE-eligible high balance loans."
“Mortgage credit availability in June fell to its lowest level since September 2020, ending more than half a year of increasing credit supply. The overall credit availability index remains close to 2014 lows, as mortgage credit has not recovered since the sharp downturn in the first half of 2020,” Kan continued.
The conventional MCAI decreased 17.1%, while the Government MCAI decreased by 1.4%. Additionally, Jumbo MCAI decreased by 11.5%, and the Conforming MCAI fell by 23.5%.
The Conventional, Government, Conforming, and Jumbo MCAIs are designed to show credit risk/availability for their respective indices. The difference between total MCAIs and the Component Indices are the loan programs which they examine. Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. Jumbo MCAI examines conventional programs outside conforming loan limits, while the Conforming MCAI examines conventional loan programs within conforming limits.
Kan added, "We did see the addition of refinance programs designed to reduce costs for lower income borrowers, but the full impact of those new loan programs remains to be seen. In addition to the tightening in supply from the policy change, there was also a pullback in jumbo ARM offerings, which contributed to the lowest supply of jumbo credit since February 2021.”
For more information, please visit www.mba.org/MortgageCredit.
