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The latest data from the Mortgage Bankers Associations’ (MBA) Mortgage Credit Availability Index (MCAI) recorded a nadir not seen in a decade.

The MCAI was down by 0.3% to 96.3 in July; the index was benchmarked to 100 in March 2012. The Conventional MCAI decreased by 0.5% and the Government MCAI dipped by 0.1%. There were mixed results in the component indices of the Conventional MCAI – the Jumbo MCAI saw a 0.8% decline but the Conforming MCAI rose by 0.2%.

“Mortgage credit availability declined to its lowest level since 2013, as lenders pulled back on underutilized loan programs and as liquidity concerns remain for some jumbo lenders,” said Joel Kan, MBA’s vice president and deputy chief economist. “Declining origination volumes have led to lower profitability for many lenders, resulting in narrower loan product offerings to reduce operational costs.”

Kan added, “One key driver of this month’s decline was a drop in cash-out refinance loan programs. The 30-year fixed mortgage rate averaged 6.94 percent in July, more than a percentage point higher than July 2022, and this has significantly discouraged cash-out refinance activity, as borrowers turn to home equity and consumer loans instead. The jumbo index fell for the third straight month, as jumbo lenders further reduce the number of available loan programs.”