Mortgage Credit Availability Index

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Mortgage credit availability increased slightly in August but remained close to the very low levels last seen in January 2013, according a report from the Mortgage Bankers Association.

Overall, an increase in the number of loan programs offering cash-out refinances and mid-range credit scores drove the uptick, said Joel Kan, MBA’s vice president and deputy chief economist.

The trade group’s monthly Mortgage Credit Availability Index picked up by 0.3% to 96.6 in August. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

As lenders seek to reduce costs, by cutting down on staff and streamlining product offerings, industry capacity continues to decline, noted Kan.

Industry professionals also winded down on their product offerings. The conforming index dropped to its lowest level since 2011. However, the jumbo index, increased after three monthly declines, indicating that the current context provided lenders with some new opportunities, said Kan.

This news comes after a year in which the nation’s largest banks, spooked by surging rates and increased regulatory risks, have shied away from the jumbo mortgage market. HousingWire covered the jumbo downturn extensively in August.

Meanwhile, the Conventional MCAI, which does not include loans backed by the government, increased 0.6% and the Government MCAI, which examines FHA, VA, and USDA loan programs, was unchanged.

Of the two component indices of the conventional index, the Jumbo MCAI increased by 2.7%, while the Conforming MCAI fell by 2.7%.

Source: housingwire.com

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Mortgage credit availability dropped to its lowest level since 2013 in July as receding  origination volumes led to lower profitability for many lenders.

Simultaneously, liquidity concerns persisted for some jumbo lenders. As a result, many companies tried to reduce their operational costs by narrowing their loan product offerings, according to Joel Kan, Mortgage Bankers Association’s vice president and deputy chief economist.

The trade group’s monthly Mortgage Credit Availability Index fell by 0.3% to 96.3 last month. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

“One key driver of this month’s decline was a drop in cash-out refinance loan programs,” said Kan. “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.”

He added that the jumbo index fell for the third straight month, as jumbo lenders further reduce the number of available loan programs.

Meanwhile, the Conventional MCAI, which does not include loans backed by the government, decreased 0.5% and the Government MCAI, which examines FHA, VA, and USDA loan programs, decreased by 0.1%.

Of the two component indices of the conventional index, the Jumbo MCAI decreased by 0.8%, and the Conforming MCAI rose by 0.2%.

Source: housingwire.com

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A measure of the availability of mortgage credit dropped to its lowest level in a decade last month as lenders sought to reduce operating costs and homeowners cut back on cash-out refinancing. The Mortgage Bankers Association said its Mortgage Credit Availability Index (MCAI), MCAI fell by 0.3 percent to 96.3 in July. A decline in the MCAI indicates that lending standards are tightening, while increases in the index indicate loosening credit.

“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,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “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 percent 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.”  

The MCAI has four component indices. The Conventional MCAI decreased 0.5 percent, while the Government MCAI dipped 0.1 percent. The Jumbo MCAI, one sub-index of the Conventional MCAI decreased by 0.8 percent while the second, the Conforming MCAI, rose by 0.2 percent.

The MCAI and its components are calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via a proprietary product from ICE Mortgage Technology. The resulting calculations are summary measures which indicate the availability of mortgage credit at a point in time. All indices were benchmarked on March 31, 2012.

Source: mortgagenewsdaily.com

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Mortgage credit availability barely increased in June as the industry continues to operate at reduced capacity. This is a consequence of persistently high mortgage rates resulting in lender consolidation as well as a decline in mortgage applications, the Mortgage Bankers Association said.

The trade group’s monthly Mortgage Credit Availability Index rose by 0.1% to 96.6 last month. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

“Mortgage credit availability was essentially unchanged in June, remaining close to the lowest level since early 2013, as the industry continues to operate at reduced capacity,” said Joel Kan, MBA’s vice president and deputy chief economist. “Lenders are streamlining their operations by offering fewer loan programs, with some exiting certain channels. Data from our Weekly Applications Survey indicated that June mortgage applications were more than 30 percent lower than a year ago and at the slowest pace since December 2022.”

Both the Conventional MCAI, which does not include loans backed by the government and the Government MCAI, which examines FHA, VA, and USDA loan programs, were unchanged. 

Of the two component indices of the conventional index, the Jumbo MCAI fell by 0.2% and the Conforming MCAI rose by 0.2%.

“The Jumbo Index declined slightly by 0.2 percent – the second straight monthly decrease – as liquidity conditions have been tightening for jumbo lending,” added Kan. 

The drop in mortgage credit availability follows a spike in mortgage rates last week, which rose to 6.81% as of July 6, according to Freddie Mac.

Source: housingwire.com

Apache is functioning normally

Mortgage credit availability barely increased in June as the industry continues to operate at reduced capacity. This is a consequence of persistently high mortgage rates resulting in lender consolidation as well as a decline in mortgage applications, the Mortgage Bankers Association said.

The trade group’s monthly Mortgage Credit Availability Index rose by 0.1% to 96.6 last month. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

“Mortgage credit availability was essentially unchanged in June, remaining close to the lowest level since early 2013, as the industry continues to operate at reduced capacity,” said Joel Kan, MBA’s vice president and deputy chief economist. “Lenders are streamlining their operations by offering fewer loan programs, with some exiting certain channels. Data from our Weekly Applications Survey indicated that June mortgage applications were more than 30 percent lower than a year ago and at the slowest pace since December 2022.”

Both the Conventional MCAI, which does not include loans backed by the government and the Government MCAI, which examines FHA, VA, and USDA loan programs, were unchanged. 

Of the two component indices of the conventional index, the Jumbo MCAI fell by 0.2% and the Conforming MCAI rose by 0.2%.

“The Jumbo Index declined slightly by 0.2 percent – the second straight monthly decrease – as liquidity conditions have been tightening for jumbo lending,” added Kan. 

The drop in mortgage credit availability follows a spike in mortgage rates last week, which rose to 6.81% as of July 6, according to Freddie Mac.

Source: housingwire.com

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Mortgage credit availability dropped in May, a consequence of a tougher mortgage landscape that has resulted in lender consolidation as well as high rates and limited inventory that has stretched consumer budgets.  

The monthly Mortgage Credit Availability Index fell by 3.1% to 96.5 last month, according to the Mortgage Bankers Association. A decline of the index, benchmarked to 100 in March 2012, indicates that lending standards are tightening while an increase suggests loosening credit.

“Mortgage credit availability decreased for the third consecutive month, as the industry continued to see more consolidation and reduced capacity as a result of the tougher market,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “With this decline in availability, the MCAI is now at its lowest level since January 2013.”

While the Conventional MCAI, which does not include loans backed by the government, decreased 2.3%, the Government MCAI, which examines FHA, VA, and USDA loan programs, fell by 3.8%.

Of the two component indices of the conventional index, the Jumbo MCAI fell by 1.5% and the Conforming MCAI dropped by 3.9%.

The jumbo index had its first contraction in three months, as some depositories assess the impact of recent deposit outflows and reduce their appetite for jumbo loans, Kan said.

Wells Fargo, a formerly important jumbo mortgage lender, is reducing its home lending footprint, and JPMorgan Chase’s acquisition of First Republic Bank will result in the discontinuation of its popular jumbo mortgage program.

The drop in mortgage credit availability follows a spike in mortgage rates during the month of May, which rose to 6.43%, according to Freddie Mac.

Single-family home prices also rose to about $450,000 in May, according to data from Altos Research, up from around $443,000 in April.

Source: housingwire.com

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Mortgage credit availability dipped for three consecutive months, largely due to shrinking refinance loans, according to the monthly Mortgage Credit Availability Index, (MCAI) which fell by 0.9% to 120 in May, the lowest level since July 2021, according to the Mortgage Bankers Association.

A decline of the index, benchmarked to 100 in March 2012, indicates lending standards are tightening while an increase suggests loosening credit.

“The index remains more than 30 percent below pre-pandemic levels, as credit tightening has occurred in recent months around refinance loan programs,” said Joel Kan, associate vice president of economic and industry forecasting at MBA. 

Credit tightening was most notable in the government and jumbo segments, Kan added. 

Both the Conventional MCAI, which does not include loans backed by the government, decreased 0.4% and the Government MCAI, which examines FHA, VA, and USDA loan programs, dropped 1.3%

Of the component indices of the Conventional MCAI, the Jumbo MCAI fell by 1.1% and the Conforming MCAI rose by 1%. 

What opportunities do lenders miss out on by not focusing on credit

HousingWire recently spoke to Mike Darne, Vice President of Marketing for CreditXpert, who said focusing first on the borrower’s credit holds the key to winning business that other lenders won’t even see.

Presented by: CreditXpert

“The decrease in government credit was driven mainly by a reduction in streamline refinance programs, as mortgage rates increased sharply through May, slowing refinance activity. Jumbo credit availability, which was starting to see a more meaningful recovery from 2020s pullback, declined after three months of expansion,” Kan said.

The drop in mortgage credit availability follows a free fall of refinance applications driven by rising mortgage rates — 5.23% as of June 9 — measured by Freddie Mac. While purchase mortgage rates fell for three consecutive weeks after hitting 5.3% in the second week of May, they recently rebounded, according to the Freddie Mac PMMS, and remained high enough to still suppress refinance activity. 

MBAs index for refinance applications dropped 6% for the week ending June 3 from the previous week. Compared to the same week a year ago, the index was 75% lower.

Weakness in both refinance and purchase applications drove down mortgage application volume last week. MBAs Market Composite Index dropped 6.5%, marking the lowest level in 22 years. 

The persistently low housing inventory and the jump in mortgage rates during the past two months are putting pressure on the purchase market, Kan said, regarding the drop in mortgage application volume this week.

“These worsening affordability challenges have been particularly hard on prospective first-time buyers,” he said.

Source: housingwire.com

Apache is functioning normally

Mortgage credit availability for borrowers fell in June as higher mortgage rates took a toll on purchasing power.

The monthly Mortgage Credit Availability Index (MCAI) fell by 0.3% in June, according to the Mortgage Bankers Association. A decline of the index, benchmarked to 100 in March 2012, indicates lending standards are tightening, while an increase suggests loosening credit. 

Credit availability was mixed by loan type. The conventional MCAI rose 1.2% while the government MCAI dipped by 1.7%. Of the component indices of the conventional MCAI, the jumbo MCAI increased by 1.4% and the conforming MCAI climbed by 0.6%. 

“Mortgage credit availability decreased slightly in June, as significantly higher mortgage rates compared to a year ago slowed refinance and purchase activity and impacted the overall mortgage credit landscape,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. 

Purchase mortgage rates, measured by the Freddie Mac PMMS Index, were at 5.3% last week. While rates are on a downward trend due to concerns about a potential recession, they remain well above last year’s 2.9% 30-year purchase rate. 

Borrowers’ demand for mortgage loans fell last week driven by a 7.7% decline in refi applications and a 4.3% dip in purchase applications from the previous week, according to the MBA.

What opportunities do lenders miss out on by not focusing on credit

HousingWire recently spoke to Mike Darne, Vice President of Marketing for CreditXpert, who said focusing first on the borrower’s credit holds the key to winning business that other lenders won’t even see.

Presented by: CreditXpert

Although there was reduced supply of lower credit score and high loan-to-value (LTV) rate-term refinance programs, the decline was offset by increased offerings for conventional adjustable rate mortgage (ARM) and high balance loans, Kan said.

In a market with a shortage of inventory and soaring rates, an increasing number of homebuyers have been opting for ARMs this year, which carry lower rates for an initial period of fixed interest and amortize over a 30-year term. Application volume for ARMs hit a 14-year high in May, making up nearly 11% of all mortgage applications. Last week, it consisted of 9.5% of all mortgage applications. 

“With higher rates and elevated home prices, more prospective buyers are applying for ARMs, but activity remains below historical averages,” Kan said. 

Source: housingwire.com

Harder for Borrowers to Secure a Loan in February, Credit Availability Hits Multi-Year Lows

Mortgage credit availability fell to just short of its 2012 benchmark level in February. The Mortgage Bankers Association (MBA) said its Mortgage Credit Availability Index (MCAI) dropped 3.0 percent from its January level to a reading of 100.1. 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. “ Mortgage credit availability decreased to its lowest level since January 2013 with all loan types seeing declines in availability over the month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “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.”  The MCAI has four component indices. The Conventional MCAI decreased 4.4 percent, while the Government MCAI was down 1.6 percent. The two component indices of the Conventional MCAI fell sharply, the decline in the Conforming MCAI noted by Kan and a 4.4 percent drop in the Jumbo index. The MCAI and its components are calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for over 95 lenders/investors are combined by MBA using data made available via a proprietary product from ICE Mortgage Technology. The resulting calculations are summary measures which indicate the availability of mortgage credit at a point in time. All indices were benchmarked on March 31, 2012.

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