January Mortgage Credit Availability Reaches 5-Month Low
Mortgage credit availability fell to a five-month low in January, the Mortgage Bankers Association reported Tuesday.
The monthly MBA Mortgage Credit Availability Index fell by 0.9 percent to 124.8 in January. The Conventional MCAI decreased by 2.5 percent, while the Government MCAI increased by 0.7 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 1.6 percent and the Conforming MCAI fell by 4.2 percent.
“Credit availability declined to its lowest level since August 2021, even as the economy and job market continued to improve,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The decline in credit supply came at a time of rising mortgage rates and limited inventory, which add to the challenges that some prospective buyers are facing. The supply of conforming mortgage credit dropped to its lowest level dating back to 2013, driven by a decrease in investor demand for loan programs catering to borrowers with higher LTVs and lower credit score profiles.”
Kan noted prior to January, there were six months of increasing jumbo credit supply, driven by strong demand, rapid home-price appreciation and the overall strength in the economy. “That growth streak ended last month, as investors reduced their willingness to purchase jumbo loans and also raised credit requirements,” he said.
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.
