Credit tightening is becoming more evident according
to the Mortgage Bankers Association (MBA). Its Mortgage Credit Availability
Index fell to a reading of 125.0 in June, a loss of 3.3 percent. A decline in
the index indicates stricter lending standards.

Joel Kan, MBA’s Associate Vice President of Economic and Industry
Forecasting explained. “Mortgage credit supply dropped again in June, as
investors further reduced their willingness to purchase jumbo loans and those
with lower credit scores. Lenders are navigating a gradual economic and housing
market recovery that is still facing headwinds from the ongoing COVID-19
pandemic. The overall credit availability index decreased 3.3 percent to its
lowest level since April 2014, with all of the sub-indexes falling to lows not
seen since 2014-2015.”

Added Kan, “Credit supply has fallen over
30 percent since February – before the pandemic – with an 18 percent decrease
in government loan availability, and a 57 percent drop in jumbo loan
availability.”

 

 

Each of the four component indices of the MCAI were, as Kan said, indicative
of less credit access. The Conventional MCAI decreased 4.1 percent, while the
Government MCAI decreased by 2.8 percent. Of the component indices of the
Conventional MCAI, the Jumbo MCAI decreased by 7.3 percent, and the Conforming
MCAI fell by 1.0 percent.

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The MCAI and each of its components are calculated using several factors
related to borrower eligibility (credit score, loan type, loan-to-value ratio,
etc.). These metrics and underwriting criteria for over 95 lenders/investors
are combined by MBA using data made available via a proprietary product from
Ellie Mae. The resulting calculations are summary measures which indicate the
availability of mortgage credit at a point in time. Base period and values for
total index is March 31, 2012=100; Conventional March 31, 2012=73.5; Government
March 31, 2012=183.5.

By Jann Swanson , dated 2020-07-09 16:23:48

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Courtesy of Mortgage News Daily

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