Mortgage credit availability drops to two-year low: MBA

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The standards for mortgage lending constrained in December, as a drop in conventional credit brought availability to its lowest point since February 2017, according to the Mortgage Bankers Association.

The MBA's Mortgage Credit Availability Index dropped to 175.0 after reaching a post-housing-crash high-water mark of 188.8 in November.

"The decline was driven by a sharp decrease in the conventional credit space, as we saw the expiration of the Home Affordable Refinance Program," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release.

The MCAI's conventional component decreased by 14.5%, as the conforming portion dropped 14% and the jumbo segment went 14.9% lower.

"Credit availability in government loans was stable over the month, ticking up slightly. We also saw a decline in high-balance and super-conforming programs, which drove the decline in the jumbo index," said Kan.

Conversely, the government MCAI had a slight bump of 0.1% from November, bucking the long-term trend that's gone on since April 2017. If it continues rising, it could be a boon to first-time buyers as the low down payment requirements carry an obvious appeal.

The MCAI is calculated by the MBA using loan program data from Ellie Mae's AllRegs Market Clarity database with a benchmark of 100 in March 2012. A lower index value indicates lenders are tightening their credit standards.

While the credit availability index has shown steady growth in 2018, it pales in comparison historically to the boom period of 2006. Before the housing bubble popped, the index came close to reaching 900.

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