As expected given the circumstances, mortgage credit availability dropped significantly in March, falling 16.1% to a score of 152.1 on the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).
That’s the lowest level since June 2015.
Driving the month-over-month decrease was the economic impact from the coronavirus pandemic.
Credit availability for conventional loans decreased 24.2%, while credit availability for government loans decreased by 6.6%.
Credit availability for jumbo loans fell the most – 36.9% – while credit for conforming loans fell by 2.7%.
“There was a reduction in the availability of loans with lower credit scores and higher LTV ratios, and the largest pullback came from the jumbo and non-QM space,” says Joel Kan, Associate Vice President of Economic and Industry Forecasting for the MBA, in a staement. “This month’s release highlights the large retreat from jumbo and non-QM investors due to a sharp drop in liquidity. Lenders are making credit criteria changes to account for the increased likelihood of forbearance and defaults, as well as higher costs.
“There was also a significant drop in availability of LIBOR-indexed ARMs, as lenders acted on the GSEs’ announcement to halt purchases of those loan products,” Kan adds.
The MCAI uses data from Ellie Mae’s AllRegs Market Clarity business information tool.
A decline in the MCAI indicates that lending standards are tightening, while increases are indicative of loosening credit.
The index was benchmarked to 100 in March 2012.