The uncertain financial environment continues to take a toll on lending standards, with the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI) falling to a reading of 92.1 in December.

The overall index was benchmarked to a reading of 100 in March 2012. Declines in the MCAI signify that lenders are tightening their credit criteria, and December’s 4.6% drop sent the index to its lowest reading since the first year of the series.

December marks the second straight month with a drop in mortgage credit availability after a transitory three-month period of increases.

Joel Kan, MBA vice president and deputy chief economist, said that “ongoing industry consolidation is resulting in more loan programs being removed from the marketplace.” Many lenders have reduced their payrolls to cope with fewer originations, resulting in more limited loan offerings.

All component sub-indices of the MCAI posted declines in December. The Conventional MCAI decreased 3.2%, while the Government MCAI backtracked by 5.9%. The two sub-indices of the Conventional MCAI took steps back as well, with the Jumbo MCAI receding 1.7% and the Conforming MCAI falling 5.9%.

In the case of the Government sub-index, Kan observed that the decrease was “driven by lower investor demand for renovation loans and streamline refinance loans.”