Mortgage Credit Availability Decreased In March

Mortgage credit availability decreased in March in the face of economic turmoil brought on by the coronavirus pandemic, the Mortgage Bankers Association reported Thursday.

The tightening credit market comes at the same time people across the country are losing jobs, real estate activities are being severely curtailed and fewer people are applying for mortgages.

The Mortgage Credit Availability Index (MCAI) fell by 16.1 percent to 152.1 in March. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. Conventional MCAI decreased 24.2 percent, while the Government MCAI decreased by 6.6 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 36.9 percent, and the Conforming MCAI fell by 2.7 percent. 

“Mortgage credit supply decreased 16 percent in March to the lowest level since June 2015, with declines in availability across all loan types. There was a reduction in the availability of loans with lower credit scores and higher LTV ratios, and the largest pullback came from the jumbo and non-QM space,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “This month’s release highlights the large retreat from jumbo and non-QM investors due to a sharp drop in liquidity. Lenders are making credit criteria changes to account for the increased likelihood of forbearance and defaults, as well as higher costs.”