July Mortgage Credit Availability at 9-Year Low
Mortgage credit availability fell for the fifth straight month in July to its lowest level in nine years, the Mortgage Bankers Association reported Tuesday.
The monthly MBA Mortgage Credit Availability Index fell by 9.0 percent to 108.8 in July. The Conventional MCAI decreased 9.8 percent, while the Government MCAI decreased by 8.4 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 13.4 percent, while the Conforming MCAI fell by 3.3 percent.
“Credit availability fell last month to the lowest level since May 2013, as lenders streamlined their loan offerings in this declining volume environment,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The 9 percent decline in the July index was the largest monthly decrease since April 2020. Lenders have responded accordingly to the decrease in demand for refinance and purchase loans by reducing loan offerings, including for ARMs, cash-out refinances and investment properties.”
The report analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool. 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.