Less mortgage credit available for a challenged housing market

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Mortgage credit availability tightened during March to its lowest level in over a year, adding another headwind to a market challenged by rising interest rates and a shortage of homes for sale.

The Mortgage Credit Availability Index fell to 177.9 in March from 180.7 in February and from its post-housing bust high point of 183.4 for March 2016. The last time the MCAI was this low was in February 2016, when the index value was 177.8.

It is the second consecutive month of tighter mortgage credit availability.

This index is calculated by the Mortgage Bankers Association using loan program data in Ellie Mae's AllRegs Market Clarity database.

"The government MCAI saw the largest decrease which was driven by investors making adjustments to their interest rate reduction offerings for Federal Housing Administration and Veterans Affairs loans," Joel Kan, the MBA's associate vice president of research and economics, said in a press release.

There was a 2.1% month-to-month decline in the government MCAI.

The conventional MCAI was down by 0.8%; its conforming loan component declined 0.8% while the jumbo component dropped 0.7% from February.

Since its inception in June 2013, the MCAI grew steadily through last March. The base index of 100 was established on loan program availability in March 2012. By the following March, it rose to 108.

But since reaching its high point in March 2017, the index flattened out, showing little to no growth — and even somewhat of a decrease — in credit availability in the past 12 months. (Using historical data, the MBA determined the MCAI during the boom years of 2006 and 2007 would have been between 750 and 850.)

While the numbers indicate lenders are tightening criteria, Carrington Mortgage Holdings' roll-out of its subprime product offering shows some are expanding the credit box.

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Underwriting GSEs Jumbo mortgages Subprime lending Mortgage Bankers Association FHA The VA Ellie Mae