The amount of credit that mortgage applicants have, as measured by the Mortgage Bankers Association (MBA) in the Mortgage Credit Availability Index (MCAI) decreased by month’s end by 9% to an index value of 108.8.
When the MCAI declines, it is indicative that lenders are tightening their standards making it harder for consumers to get a mortgage. When the MCAI goes up, it is indicative of loosing credit standards.
Looking back the index was benchmarked in March 2012 to a value of 100.
For conventional loans, the MCAI decreased 9.8%, government loans dropped by 8.4%. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 13.4%, and the Conforming MCAI fell by 3.3%.
“Credit availability fell last month to the lowest level since May 2013, as lenders streamlined their loan offerings in this declining volume environment,” said Joel Kan, MBA’s Associate VP of Economic and Industry Forecasting. “The 9% decline in the July index was the largest monthly decrease since April 2020. Lenders have responded accordingly to the decrease in demand for refinance and purchase loans by reducing loan offerings, including for ARMs, cash-out refinances, and investment properties."
Added Kan, “The overall general tightening in credit availability also affected jumbo loans and non-QM loan programs.”