Mortgage credit availability decreases yet again

MBA’s index recedes for a third straight month

Mortgage credit availability fell in May, with the Mortgage Credit Availability Index (MCAI) maintained by the Mortgage Bankers Association (MBA) down to a reading of 96.5.

That’s down 3.1% from April, marking the index’s third straight month of declines. Decreases in the MCAI, which was benchmarked to 100 in 2012, indicate tightening credit standards, while growth in the index suggest that lenders are loosening lending criteria.

The conventional component of the MCAI declined 2.3% month over month, while the government subindex fell by 3.8%. The conventional index’s own component indices for conforming and jumbo loans dropped by 1.5% and 3.9%, respectively.

“Mortgage credit availability decreased for the third consecutive month as the industry continued to see more consolidation and reduced capacity as a result of the tougher market,” said Joel Kan, the MBA’s vice president and deputy chief economist. “With this decline in availability, the MCAI is now at its lowest level since January 2013.”

The conforming index, in particular, slid nearly 4% to reach a new record low. The jumbo index, meanwhile, saw its first backtrack in three months as some banks “assess the impact of recent deposit outflows and reduce their appetite for jumbo loans,” Kan said.

“Additionally, lenders pulled back on loan offerings for higher LTV and lower credit-score loans, even as loan applications continued to run well behind last year’s pace,” he said. “Both conventional and government indices saw declines last month, and the government index fell by 3.8% to the lowest level since January 2013.

“In a market where a significant share of demand is expected to come from first-time homebuyers, the depressed supply of government credit is particularly significant.”


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