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Mortgage credit availability has hit a 10-month low, which ended more than half a year of credit supply gains.
Last weekend, the Mortgage Bankers Association reported a fall in its Mortgage Credit Availability Index (MCAI) by 8.5% to 118.8 in June, signaling a contraction of lending standards. In March 2012 the index was set to 100.
Joel Kan, AVP of economic and industry forecasting at MBA, said that mortgage credit has not recovered since the sharp downturn in the first half of 2020.
He cited that the GSE policy changes were the cause of the drop in credit availability which reduced the availability of high LTV refinance loans.
He said because of this there has been an addition of refinance programs that are designed to reduce costs for lower-income borrowers, but the full impact of those new loan programs can be seen in due course.
Along with the tightening in supply because of policy change, there was also a withdrawal in jumbo ARM offerings, that resulted in the lowest supply of jumbo credit since February 2021.
The Conventional MCAI jumped 17.1%, and the Government MCAI dropped by 1.4%. Of the Conventional MCAI’s component indices, there was a decrease of 11.5% in the Jumbo MCAI and a drop in the Conforming MCAI by 23.5%.
Reference Source: MPA
