What's behind the new drecrease?
After six consecutive months of expansion, US mortgage credit availability contracted in June, with the Mortgage Bankers Association (MBA) reporting a 1.3% decline in its Mortgage Credit Availability Index (MCAI).
The index fell to 103.7, based on data from ICE Mortgage Technology. A lower index reading indicates tighter lending standards, while a higher reading suggests easier credit access.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the decline to a decrease in programs with low minimum credit scores and fewer streamline refinance options.
“There was also a reduction in streamline refinance programs. With the job market softening, and increasing mortgage delinquency rates, some lenders are tightening up their credit offerings,” he said.
Kan also noted that while overall jumbo credit availability decreased slightly compared to May, non-agency loan programs registered a small increase.
The Conventional MCAI decreased by 1.2% in June, and the Government MCAI fell by 1.7%. The Government MCAI tracks mortgage credit availability for loan programs insured or guaranteed by government agencies such as the FHA, VA, and USDA. The Conventional MCAI, which excludes government-backed loans, includes the Jumbo and Conforming MCAIs.
Within the Conventional segment, the Jumbo MCAI, which measures credit availability for loans exceeding conforming loan limits, declined by 0.7%. The Conforming MCAI, which measures programs within conforming loan limits set by government-sponsored enterprises, decreased by 2.2%.
The MCAI and its components—Conventional, Government, Conforming, and Jumbo—are calculated using the same methodology but cover different loan populations. The MCAI was benchmarked to 100 in March 2012, with adjusted base levels for the Conventional and Government indices set at 73.5 and 183.5, respectively, to better represent their position relative to the total index.
An expanded historical series for the total MCAI provides data back to 2004, covering periods including the housing crisis and subsequent recession. This series does not extend to the component indices. Data prior to March 31, 2011, was compiled at six-month intervals with interpolation applied for intervening months. The methodology for the 2004 to 2010 period remains unchanged.
MBA calculates the MCAI using factors such as borrower credit scores, loan types, and loan-to-value ratios, drawing data from over 95 lenders and investors. The association uses a proprietary formula to provide a standardized measure of mortgage credit availability at a given time.
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