Mortgage Credit Availability Declined in January as Lending Standards Tighten

According to the latest Mortgage Bankers Association (MBA) Mortgage Credit Availability Index (MCAI), which analyzes data from the ICE Mortgage Technology, mortgage credit availability decreased in January. The MCAI fell by -0.9% to a reading of 124.8 in January.

A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.

The Conventional MCAI decreased -2.5%, while the Government MCAI increased by 0.7%. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by -1.6%, and the Conforming MCAI fell by -4.2%.

In a statement prepared to accompany the January MCAI release, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting said, “Credit availability declined to its lowest level since August 2021, even as the economy and job market continued to improve. The decline in credit supply came at a time of rising mortgage rates and limited inventory, which add to the challenges that some prospective buyers are facing. The supply of conforming mortgage credit dropped to its lowest level dating back to 2013, driven by a decrease in investor demand for loan programs catering to borrowers with higher LTVs and lower credit score profiles.”

“Prior to last month, there were six months of increasing jumbo credit supply, driven by strong demand, rapid home-price appreciation, and the overall strength in the economy,” Kan added. “That growth streak ended last month, as investors reduced their willingness to purchase jumbo loans and also raised credit requirements.”