Mortgage credit supply falls to a new low
Mortgage lenders tightened their guidelines in May, with the Mortgage Bankers Association reporting that mortgage credit supply plummeted to its lowest level since July 2021.
According to the trade association, its Mortgage Credit Availability Index (MCAI) edged down by 0.9% to a reading of 120 in May. This is the third consecutive month the index has declined, signaling a continued tightening in mortgage credit.
Read more: Mortgage lending plummets across US - report
Joel Kan, MBA’s associate vice president of economic and industry forecasting, noted that the index remains more than 30% below pre-pandemic levels.
The report showed that May’s tightening was most notable in the government and jumbo segments of the mortgage market. MBA’s Conventional MCAI dropped 0.4%, while the Government MCAI fell by 1.3%. Jumbo credit supply decreased by 1.1%, while the availability of conforming loans rose by 1%.
Kan cited recent months’ credit tightening in refinance programs as the major contributor to the downturn.
“The decrease in government credit was driven mainly by a reduction in streamline refinance programs, as mortgage rates increased sharply through May, slowing refinance activity. Jumbo credit availability, which was starting to see a more meaningful recovery from 2020’s pullback, declined after three months of expansion,” Kan explained.
