Mortgage Credit Decreased Slightly in January But Remains at a Healthy Level

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Mortgage credit availability dipped 0.2% in January to a score of 181.9 on the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).

Credit availability for conventional loans decreased 0.5% while credit availability for government loans increased by 0.4%.

Within the conventional category, credit for jumbo loans decreased by 0.3% while credit for conforming loans fell by 0.9%.

“Mortgage credit availability was mostly unchanged to start 2020,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Similar to December of 2019, the decline came from the reduction of low credit score, high-LTV programs. Furthermore, there continues to be movement with both adds and drops in the government program space, with the net result last month showing small growth in the government index.

“Although credit supply has flattened these last two years, the meaningful increase seen overall since the Great Recession has been helpful to the growing share of first-time homebuyers, as well as refinance borrowers looking to act on lower mortgage rates,” Kan adds. “Ongoing housing supply constraints in the lower-price range continues to hold prospective buyers back the most.”

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.

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