Low rates, scarce credit.
With mortgage rates at historically low levels, mortgage credit availability in the United States decreased even further in June, according to a report released Thursday by the Mortgage Bankers Association.
MBA’s Mortgage Credit Availability Index fell by 3.3 percent to 125 in June – reflecting a 30 percent drop in credit availability since February, the month before the coronavirus pandemic gripped the nation. The index reached its lowest level since April 2014.
“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,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
The conventional loan index decreased 4.1 percent, while the government loan index decreased by 2.8 percent. Of the component indices of the conventional index, the jumbo loan index decreased by 7.3 percent, and the conforming index fell by 1 percent.
“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,” Kan said.