Mortgage credit availability decreased in July, falling 0.3% to a score of 96.3 on the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI), which was benchmarked to 100 in March 2012.
It was the lowest level of available mortgage credit in 10 years, according to the MBA.
Credit availability for conventional mortgages decreased 0.5%, while credit availability for government loans decreased by 0.1%.
Credit for jumbo loans decreased by 0.8%, while credit for conforming loans rose by 0.2%.
“Mortgage credit availability declined to its lowest level since 2013, as lenders pulled back on underutilized loan programs and as liquidity concerns remain for some jumbo lenders,” says Joel Kan, vice president and deputy chief economist for the MBA, in a statement. “Declining origination volumes have led to lower profitability for many lenders, resulting in narrower loan product offerings to reduce operational costs.
“One key driver of this month’s decline was a drop in cash-out refinance loan programs,” Kan says. “The 30-year fixed mortgage rate averaged 6.94 percent in July, more than a percentage point higher than July 2022, and this has significantly discouraged cash-out refinance activity, as borrowers turn to home equity and consumer loans instead. The jumbo index fell for the third straight month, as jumbo lenders further reduce the number of available loan programs.”
Photo: Tierra Mallorca