Mortgage Credit Availability Shrinks for Third Consecutive Month in February

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 February. Mortgage credit availability has declined eleven times in the past twelve months.

The MCAI fell by 3.0% to a reading of 100.1 in February. 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 fell 4.4%, while the Government MCAI declined 1.6%. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 4.4%, while the Conforming MCAI dropped 4.3%.

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

“Mortgage credit availability decreased to its lowest level since January 2013 with all loan types seeing declines in availability over the month. The conforming subindex decreased 4.3 percent to its lowest level in the survey, which goes back to 2011. This decline was driven by the ongoing trend of shrinking industry capacity as mortgage rates stayed significantly higher than a year ago. Additionally, in this volatile rate environment and potentially weakening economy, there was also a reduction in refinance programs offered for low credit score and high-LTV borrowers.”