MBA Report Signifies Tougher Lending Standards, Mortgage Credit Availability Decline


The Mortgage Bankers Association (MBA) reports that mortgage credit availability decreased in May according to the Mortgage Credit Availability Index (MCAI), a report that analyzes data from ICE Mortgage Technology. The MCAI fell by 0.9% to 120 in May. 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 supply declined for the third month in a row to the lowest level since July 2021. The index remains more than 30 percent below pre-pandemic levels, as recent months’ credit tightening has occurred in refinance loan programs,” states Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Last month’s tightening was most notable in the government and jumbo segments of the mortgage market.”

The Conventional MCAI decreased 0.4%, while the Government MCAI decreased by 1.3%. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 1.1%, and the Conforming MCAI rose by 1%.

“The decrease in government credit was driven mainly by a reduction in streamline refinance programs, as mortgage rates increased sharply through May, slowing refinance activity,” adds Kan. “Jumbo credit availability, which was starting to see a more meaningful recovery from 2020’s pullback, declined after three months of expansion.”

Image: “home yellow” by nikcname is licensed under CC BY 2.0

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