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The House Finance Policy Center’s latest credit availability index (HCAI) reveals that access to mortgage credit declined to 5.56% during Q2 2019, according to the Urban Institute.
Declines, according to the report, were driven by the portfolio and private label share of the mortgage market and a drop in the government share. The report adds that credit availability also fell in the government and GSE channels.
Credit availability through Fannie Mae and Freddie Mac has been increasing since the Great Recession. The HCAI reached 3% in Q3 2018 for the first time since 2008 and continue to rise. The government share decreased to 12% after reaching its highest level since 2009 during Q1 2019.
While mortgage credit fell, the Mortgage Bankers Association revealed Wednesday that mortgage applications rose 0.6% for the week ending October 25. The refinance index fell just 1% from the prior week and is still 134% higher than in 2018.
The MBA’s report found that the purchase index rose 2% week-over-week and was 10% higher than it was last year.
"The 10-year Treasury rate rose slightly last week, as markets expected more progress toward a trade deal between the U.S. and China. Mortgage rates increased for the second straight week as a result, with the 30-year fixed rate climbing to 4.05%— the highest level since the end of July," said Joel Kan, AVP of Economic and Industry Forecasting. "Mortgage applications were mostly unchanged, with purchase activity rising 2 percent and refinances decreasing less than 1 percent. Purchase applications continued to run at a stronger pace than last year, finishing a robust 10% higher than a year ago. Considering how much lower rates are compared to the end of 2018, purchase applications should continue showing solid year-over-year gains."
Refinances accounted for 58% of total applications, which is a decline from 58.5% from the prior week.
The FHA share of total applications fell by 0.1% to 12% from the prior week. The VA share of applications fell to 11.8% from the prior week’s 13.5%.
