Mortgage Credit Availability Declines for Sixth Consecutive Month in August

According to the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI), which analyzes data from the ICE Mortgage Technology, mortgage credit availability declined for the sixth consecutive month in August. The MCAI declined 0.5% to a reading of 108.3 in August.

The MBA notes that 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 1.0%, while the Government MCAI remained virtually unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.7 %, while the Conforming MCAI fell by 1.2%.

Adding his insight and providing additional background to the MCAI for August, Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said:

“Mortgage credit availability declined slightly in August, as investors reduced their offerings of ARM and non-QM loan programs. With overall origination volume expected to shrink in 2022, some lenders continue to streamline their operations by dropping certain loan programs to simplify their offerings. Additionally, with a worsening economic outlook and signs of cooling in home-price growth, the appetite for riskier loan programs has been reduced.

Slightly offsetting these trends, however, was a small increase last month in new HELOC products. With aggregate home equity still at elevated levels, HELOCs could benefit borrowers who might not want to give up on their current, low mortgage rate but do want to utilize their home equity to support other spending plans.”