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Mortgage Credit Availability Dips, Government Loans Fall Most

The availability of mortgage credit has dropped more than a full percent over the last month, according to the recent Mortgage Credit Availability Index (MCAI) released by the Mortgage Bankers Association (MBA) on Thursday. The drop indicates lenders are continuing to tighten their credit standards.

According to the Index, mortgage credit availability fell 1.1 percent in May. Broken down by loan type, government credit availability saw the biggest drop, falling 1.9 percent over the month. Conforming credit dipped 0.3 percent over May, while conventional and jumbo credit availability headed the other direction, rising 0.2 percent and 0.8 percent, respectively.

“The MCAI decreased 1.1 percent to 181 in May,” MBA reported. “A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.”

Jumbo loan credit availability has risen 13 out of the last 15 months, according to Lynn Fisher, Vice President of Research and Economics at MBA. This has helped to balance dips on other lending indices.

“Credit availability slipped in May, primarily driven by investors consolidating their offerings for government insured loans,” Fisher said. “These decreases were partially offset by continued expansion among jumbo loan programs.”

May marks a steeper decrease in credit availability over April, which experienced a 0.2 percent dip in its MCAI. Fisher attributed last month’s drop to investor mergers, among other things.

“After some program changes early in the year and some merger activity among investors, credit availability held fairly steady in April with little discernable change in the composition of the supply of credit for government and jumbo programs," Fisher said. "Conforming credit availability has slipped a bit since the beginning of the year, with fewer program offerings along a range of credit characteristics and no particular culprit."

Last month, the government MCAI remained steady, while the conforming MCAI dropped the most, falling 0.6 percent.

The MCIA is based on data from Ellie Mae’s AllRegs Market Clarity tool and is released on a monthly basis. To view the full Mortgage Credit Availability Index for May, visit MBA.org/MortgageCredit.


About Author: Aly J. Yale

Aly J. Yale is a longtime writer and editor from Texas. Her resume boasts positions with The Dallas Morning News, NBC, PBS, and various other regional and national publications. She has also worked with both the Five Star Institute and REO Red Book, as well as various other mortgage industry clients on content strategy, blogging, marketing, and more.

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