Mortgage credit keeps getting tighter, but the decrease in credit availability leveled off in May, the Mortgage Bankers Association reported Tuesday.
May marked the sixth straight month that saw mortgage credit tighten, falling 3.1 percent in the month. Mortgage credit availability has decreased by nearly 32 percent over the last six months, according to MBA’s Mortgage Credit Availability Index (MCAI).
The MCAI fell to 129.3 in May. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
“Mortgage lenders in May responded accordingly to the increased risk and uncertainty in the economy,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Credit availability continued to decline, with MBA’s overall index now at its lowest level since June 2014.” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.
Kan said, “There was a reduction in supply across all loan types, driven by further pullback in investors’ appetites for loan programs with low credit scores and high LTVs. Credit tightening was observed at both ends of the market, with less availability of low down-payment programs designed for first-time homebuyers, as well as for conforming and non-conforming jumbo loans.”