Mortgage Credit Availability in July Declines to Its Lowest Level Since 2013

According to the Mortgage Bankers Association’s (MBA) Mortgage Credit Availability Index (MCAI) report, which analyzes data from the ICE Mortgage Technology, mortgage credit availability decreased in July.

The MCAI declined 0.3% to a reading of 96.3 in July. 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 declined 0.5%, while the Government MCAI was 0.1% lower. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.8%, and the Conforming MCAI rose by 0.2%.

Providing additional background and his analysis to the MCAI for July, Joel Kan, MBA’s Vice President and Deputy Chief Economist, said:

“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. Declining origination volumes have led to lower profitability for many lenders, resulting in narrower loan product offerings to reduce operational costs. 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% 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.”