June Mortgage Credit Availability Down 8.5%
Mortgage credit availability decreased in June to its lowest level since September, the Mortgage Bankers Association reported Thursday.
The MBA Mortgage Credit Availability Index, which analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool, fell by 8.5 percent to 118.8 in June. The Conventional MCAI decreased by 17.1 percent, while the Government MCAI decreased by 1.4 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 11.5 percent, while the Conforming MCAI fell by 23.5 percent.
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
“Mortgage credit availability in June fell to its lowest level since September 2020, ending more than half a year of increasing credit supply,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “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 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. “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,” he said. “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.”
A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
About the Mortgage Credit Availability Index
The MCAI provides the only standardized quantitative index solely focused on mortgage credit.
The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for more than 95 lenders/investors are combined by MBA using data made available via the AllRegs Market Clarity product and a proprietary formula derived by MBA to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time. Base period and values for total index is March 31, 2012=100; Conventional March 31, 2012=73.5; Government March 31, 2012=183.5.
To learn more about the ICE Mortgage Technology AllRegs Market Clarity platform, visit http://answers.allregs.com/MCAI-Market-Clarity. For more information on the Mortgage Credit Availability Index, including Methodology, Frequently Asked Questions and other helpful resources, visit www.mba.org/MortgageCredit or contact MBAResearch@mba.org.
