Weekly Real Estate News
Summary
MBA reports a 0.2 percent decline in mortgage credit availability to 107.1 in September, with conventional credit tighter and government credit unchanged.
Mortgage lenders modestly tightened credit offerings in September, pulling back on some cash-out refinance and investor programs while leaving government-backed credit availability unchanged, according to the Mortgage Bankers Association’s latest Mortgage Credit Availability Index.
The index declined 0.2% to 107.1, where a lower reading indicates that fewer or more restrictive loan products are available. The conventional component slipped 0.4%; jumbo credit declined 0.3% and conforming credit fell 0.2%. The government index was flat for a third consecutive month.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the decline to tighter documentation requirements on conventional loans and fewer offerings for cash-out refinances and investor purchases. He said jumbo availability had contracted for a second straight month, while growth in some non-agency programs continued to support that market.
The survey measures the availability of products and underwriting terms rather than how many borrowers actually applied or received approvals. MBA calculates it from eligibility criteria across more than 95 lenders and investors using data from ICE Mortgage Technology. The total index is benchmarked to 100 in March 2012.
That distinction is important this week. WRE News reported a 4.2% drop in weekly mortgage applications as the MBA’s contract-rate measure reached 7.49%. The new availability reading points to a separate obstacle: some prospective borrowers may face narrower product menus even if they can afford the prevailing rate.
The conventional weakness does not mean all borrowers are facing identical changes. The government index was steady, and MBA’s reference to non-agency program growth suggests lenders remain willing to serve certain borrowers outside traditional conforming channels. Whether that offsets the retreat in cash-out and investor offerings will depend on lender pricing and underwriting practices.
The September reading was released October 8, after WRE’s morning coverage of rates and small-balance lending. It is a new measure of credit supply, not a second report on the same rate movement.
