Mortgage Credit Tightened in September

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Mortgage credit availability decreased in September, falling 1.9% to a score of 118.6 on the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).

A drop in the index score indicates that credit is tightening while an increase indicates it is loosening.

The index was benchmarked to 100 in March 2012.

Credit for conventional loans decreased 6.1% while credit for government loans increased by 1.4%.

Credit for jumbo loans decreased by 2.1%. Credit for conforming loans plummeted 9.5%. 

“Mortgage credit supply decreased in September to its lowest level since February 2014, driven in part by a 9.5 percent decline in the conforming loan segment,” says Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “This reduction was the result of lenders discontinuing conforming ARM loan offerings in advance of the September 30, 2020, application deadline for GSE-eligible, LIBOR-indexed ARM loans.”

“Across all loan types, there continues to be fewer low credit score and high-LTV loan programs,” Kan adds. “The housing market overall is on strong footing, but the data show that lenders are being cautious, given the spike in mortgage delinquency rates in the second quarter, as well as the ongoing economic uncertainty.” 

The report utilizes data from Ellie Mae’s AllRegs Market Clarity business information tool.

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