Mortgage credit availability was something of an elusive commodity last month, according to the Mortgage Credit Availability Index (MCAI) data from the Mortgage Bankers Association (MBA).
The MCAI dropped by 3.1% to 96.5 in May – the index was benchmarked at 100 in March 2012 and a decline indicates tighter lending standards.
The Conventional MCAI decreased 2.3% and declines were recorded in its component indices: the Jumbo MCAI fell 1.5% and the Conforming MCAI tumbled 3.9%. The Government MCAI took a 3.8% slide.
“Mortgage credit availability decreased for the third consecutive month, as the industry continued to see more consolidation and reduced capacity as a result of the tougher market. With this decline in availability, the MCAI is now at its lowest level since January 2013,” said Joel Kan, MBA’s vice president and deputy chief economist. “The Conforming index decreased almost 4% to its lowest level in the history of the survey, which dates back to 2011. The Jumbo index fell by 1.5% last month, its first contraction in three months, as some depositories assess the impact of recent deposit outflows and reduce their appetite for jumbo loans. Additionally, lenders pulled back on loan offerings for higher LTV and lower credit score loans, even as loan applications continued to run well behind last year’s pace.”
Kan added that in “a market where a significant share of demand is expected to come from first-time homebuyers, the depressed supply of government credit is particularly significant.”
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