Credit Availability Falls To Lowest Point Since 2013

Mortgage credit availability dropped to its lowest level since March 2013 in September, according to the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI).

The MCAI fell by 5.4% to a reading of 102.5 last month.

This is the seventh straight month of tightening lending standards.

The Conventional MCAI fell 4.9%. Its component indices also declined, with the Jumbo down 5.8% and the Conforming down 3.6%.

The Government MCAI also dropped by 5.8%. This index has fallen in seven of the last eight months, and is now its lowest point since April 2013.

Most of these indices have fallen to their lowest levels in more than a year.

“With the likelihood of a weakening economy, which would lead to an increase in delinquencies, there was a smaller appetite for lower credit score and high LTV loan programs, along with a reduction in government streamline refinance programs,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

“As mortgage rates have more than doubled over the past year, resulting in a drop in refinance activity, lenders have worked to reduce excess capacity and costs by eliminating underutilized loan programs.”

In July, the latest data available from CoreLogic, delinquencies were down 1.2% YOY, accounting for only 3% of all U.S. mortgages.

But they are beginning to rise, though the change is small.

“Early-stage delinquencies are showing a small but clear increasing trend on a month-over-month and year-over-year basis,” said Molly Boesel, principal economist at CoreLogic. 

“While the share of mortgages that are 30 to 89 days past due remains below the pre-pandemic level, the slight increase is occurring in most areas of the country and could indicate that more borrowers are having trouble making their monthly payments.”

A decline in the MCAI shows tightening lending standards, while an increase shows loosening credit. The index was benchmarked to 100 in March 2012. The expanded MCAI series provides data on mortgage credit availability going back a decade.

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