Less mortgage credit available for lower-end borrowers

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There were fewer mortgage programs available to borrowers at the lower end of the credit spectrum in December, resulting in an overall decrease in credit availability.

The Mortgage Bankers Association's Mortgage Credit Availability Index fell 1.8% in December to 179.2 from November's 182.4.

This is still higher than December 2016's MCAI of 175.2.

"In December a handful of investors made end of the year adjustments to their menu of offerings," said Lynn Fisher, the MBA's vice president of research and economics, in a press release.

"This resulted in a net decrease in credit availability for government-backed programs, and especially for lower credit score, higher loan-to-value loans, as well as streamline (requiring less documentation) refinances. Despite the decline in the jumbo credit availability over the month, the jumbo index was up nearly 20% from December a year ago, by far the largest gain among the component indices."

December's decline dropped the MCAI to its lowest point since July. Still on a whole, mortgage credit availability was higher during 2017 than any time since the start of the housing bust. The post-bust MCAI high of 183.4 was set in March 2017.

The government MCAI, which measures Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture mortgage programs being offered, fell 2.6% from November.

There was a much smaller decline in the conventional MCAI of 0.7%. This index is broken down into two components: the conforming loan MCAI, which was down 0.1% from the previous month, and the jumbo MCAI, which was down 1.4%.

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