Mortgage credit availability decreased 3.1% in May compared with April as lenders pulled back on offerings, according to the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).
Credit availability for conventional loans decreased 2.3%, while credit for government loans fell by 3.8%.
Credit availability for jumbo loans decreased by 1.5%, and credit for conforming loans fell by 3.9%.
“Mortgage credit availability decreased for the third consecutive month, as the industry continued to see more consolidation and reduced capacity as a result of the tougher market,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “With this decline in availability, the MCAI is now at its lowest level since January 2013.
“The conforming index decreased almost 4 percent to its lowest level in the history of the survey, which dates back to 2011,” Kan says. “The jumbo index fell by 1.5 percent last month, its first contraction in three months, as some depositories assess the impact of recent deposit outflows and reduce their appetite for jumbo loans.
“Additionally, lenders pulled back on loan offerings for higher LTV and lower credit score loans, even as loan applications continued to run well behind last year’s pace,” Kan adds. “Both conventional and government indices saw declines last month, and the government index fell by 3.8 percent to the lowest level since January 2013.
“In a market where a significant share of demand is expected to come from first-time homebuyers, the depressed supply of government credit is particularly significant.”
Photo: Maria Ziegler