MCAI dropped 1.7% in November.
The Mortgage Bankers Association released a report indicating a tightening of lending standards in November. According to the Mortgage Credit Availability Index (MCAI), a measure derived from ICE Mortgage Technology data, there has been a noticeable contraction in mortgage credit availability.
The MCAI experienced a decline of 1.7%, settling at 96.5 for the month of November. This decline signals a tightening of lending standards in the mortgage industry. The index, which was set at a benchmark of 100 in March 2012, helps gauge the ease with which borrowers can secure mortgages; a decrease in the MCAI suggests stricter lending criteria.
Breaking down the index, the Conventional MCAI saw a more significant drop of 3.6%, while the Government MCAI remained unchanged. Within the Conventional MCAI, the Jumbo MCAI, which refers to larger loans that exceed the conforming loan limits, fell by 5.4%. In contrast, the Conforming MCAI, which includes loans that fall under these limits, did not see any change.
“Credit availability in November declined to its lowest level in four months, driven by reduced offerings of Non-QM and jumbo loan programs,” said Joel Kan, MBA’s vice president and deputy chief economist. “The conforming and government indices were unchanged over the month but remained close to multi-year lows. Overall credit availability was 7% below last year’s level, as the industry has reduced capacity in response to declining origination volume and lenders continuing to simplify their loan offerings.”
The overall credit availability is currently 7% lower than the level seen last year. This contraction reflects the industry's response to decreasing origination volume, coupled with lenders' efforts to streamline their loan offerings.
This tightening in mortgage credit availability is a critical development, reflecting the ongoing recalibration of the lending industry in response to market dynamics and economic conditions. The report underscores the challenges borrowers face in an environment of changing credit access, highlighting a cautious approach by lenders amidst evolving market scenarios.