MBA's mortgage credit availability index reflects stricter lending standards
Mortgage credit availability hit its lowest level in 12 years as the industry continued consolidating and lending criteria became more stringent.
The Mortgage Bankers Association reported a 4.6% month-over-month decline in its Mortgage Credit Availability Index (MCAI), bringing it down to 92.1 in December. This is the lowest level of mortgage credit availability since March 2012, the benchmark date for the index.
The decline in the MCAI indicates that lenders are adopting stricter criteria, making it more challenging for potential homebuyers to secure mortgage loans. Meanwhile, an increase in the MCAI would suggest loosening credit standards.
“Credit availability declined in December to the lowest level since 2012, as ongoing industry consolidation is resulting in more loan programs being removed from the marketplace,” said Joel Kan, MBA’s vice president and deputy chief economist.
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Breaking down the index, the Conventional MCAI decreased by 3.2%, while the Government MCAI experienced a more significant drop of 5.9%. Further detailing the conventional segment, the Jumbo MCAI decreased by 1.7%, and the Conforming MCAI fell by 5.9%.
“Both conventional and government indices experienced a decrease,” Kan said in the report. “The decrease in the government index was driven by lower investor demand for renovation loans and streamline refinance loans.”
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