Mortgage credit availability fell over 30% in four months: MBA

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Mortgage credit availability continued its decline in June, tightening to the lowest level since April 2014, according to the Mortgage Bankers Association.

The MBA's Mortgage Credit Availability Index decreased for the seventh straight month, sliding an additional 3% to 125 in June from 129.3 in May and 189.8 from the year earlier — its highest level since 2008. Prior to the onset of the pandemic in February, the index sat at 181.3.

Fannie Mae and Freddie Mac's suspension of bulk sales and limiting of remaining purchases in May likely contributed toward stricter underwriting throughout the industry.

"The overall credit availability index decreased 3.3% to its lowest level since April 2014, with all of the sub-indexes falling to lows not seen since 2014-2015," Joel Kan, the MBA's associate vice president of economic and industry forecasting, said in a press release. "Credit supply has fallen over 30% since February — before the pandemic — with an 18% decrease in government loan availability and a 57% drop in jumbo loan availability."

By product segment, the conventional MCAI fell 4.1% from May, dragged down by a 7.3% drop in the jumbo index while the conforming product component decreased 1%.

The government MCAI, which measures Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture products, declined by 2.8%. Government mortgage credit availability has tightened almost every month since April 2017.

The MBA calculates MCAI using loan program data from Ellie Mae's AllRegs Market Clarity database with a benchmarked value of 100 based on conditions in March 2012.

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Underwriting Credit quality GSEs Coronavirus Jumbo mortgages FHA Secondary market Mortgage Bankers Association