Mortgage Credit Availability Dips in U.S.

Based on a new report from the Mortgage Bankers Association, and new data from their Mortgage Credit Availability Index, U.S. mortgage credit availability decreased in January 2020.

The MCAI fell by 0.2 percent to 181.9 in January. 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 decreased 0.5 percent, while the Government MCAI increased by 0.4 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.3 percent, and the Conforming MCAI fell by 0.9 percent.

"Mortgage credit availability was mostly unchanged to start 2020, decreasing 0.2 percent in January," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Similar to December of 2019, the decline came from the reduction of low credit score, high-LTV programs. Furthermore, there continues to be movement with both adds and drops in the government program space, with the net result last month showing small growth in the government index."

Added Kan, "Although credit supply has flattened these last two years, the meaningful increase seen overall since the Great Recession has been helpful to the growing share of first-time homebuyers, as well as refinance borrowers looking to act on lower mortgage rates. Ongoing housing supply constraints in the lower-price range continues to hold prospective buyers back the most."