Mortgage Credit Availability Shrinks Again in April

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 April. The MCAI fell by 0.9% to a reading of 99.6 in April.

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 increased 0.5%, while the Government MCAI declined 2.1%. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.5%, and the Conforming MCAI dropped 1.1%.

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

“Mortgage credit availability declined in April to the lowest level since January 2013, reflecting the tightening in broader credit conditions stemming from recent banking sector challenges and an uncertain economic outlook. The contraction was driven by reduced demand for loan programs such as certain adjustable-rate mortgages loans, cash-out and streamline refinances, and those with lower credit score requirements. Government credit supply decreased for the third consecutive month, as industry capacity continues to adjust to significantly reduced origination volume, along with the expectations of a weakening economy later this year.”

Even with high mortgage rates and reduced credit availability, the lack of for-sale inventory continues to be the biggest hurdle to more home purchase growth this year.”