Mortgage credit availability decreased in December, according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) that analyzes data from ICE Mortgage Technology. The MCAI fell by 0.1 percent to 103.3 in December.
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. The Conventional MCAI decreased 0.1%, while the Government MCAI decreased by 0.1%. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.2%, and the Conforming MCAI was unchanged.
“Mortgage credit availability was mostly unchanged in December as mortgage rates remained significantly higher than the prior two years and both refinance and purchase activity slowed dramatically,” says Joel Kan, MBA’s vice president and deputy chief economist. “The doubling of mortgage rates over the past year caused credit availability to shrink 18 percent during the same period.”
“This pivot in the market resulted in lenders exiting certain origination channels to manage their operational costs or stop lending altogether, which was a main driver in the decrease in credit supply,” continues Kan. “Additionally, investors stopped offering many streamlined refinance programs as rates increased and the refinance market shrank. The segment of the market which showed the sharpest decline in credit availability was FHA and VA lending – which saw a 23 percent decline over 12 months.”
Image: “Craftsman house, Wallingford” by brewbooks is licensed under CC BY-SA 2.0 .