Mortgage Credit Availability Drops in US

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Mortgage credit availability in the U.S. decreased in September, as lenders tightened access to loans. 

The Mortgage Credit Availability Index dropped 0.7 percent to 110.7 in September, after a similar decline in August, according to the Mortgage Bankers Association. 

A drop in the index indicates market lending standards are tightening.

"Credit availability tightened last month as more lenders removed program offerings with loan terms greater than 30 years and/or interest-only features, similar to the trend we observed last month," Mike Fratantoni, MBA's vice president of research and economics, said in the release. "Just as before, we believe this reflects lenders implementation of the Ability to Repay/Qualified Mortgage regulation which comes fully into effect in January."

The market has witnessed an increase in willingness to offer higher LTV loans, mostly to jumbo borrowers to offset the stricter lending, MBA said. 

The index was benchmarked at 100 in March 2012. In 2007 it would have been at approximately 800, demonstrating the greater availability of credit at the time.