February Sees Decline In U.S. Mortgage Credit Availability

Mortgage News March 24, 2023

The Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA), shows that mortgage credit availability decreased in February. The MCAI, which analyzes data from ICE Mortgage Technology, fell by 3.0 percent to 100.1 in February. According to the index, the decline signals tightening lending standards, while the increase indicates loosening credit standards.

In February, the Conventional MCAI saw a decline of 4.4 percent, as did the Jumbo MCAI. The Government MCAI decreased by 1.6 percent, while the Conforming MCAI fell by 4.3 percent. The MCAI was benchmarked to 100 in March 2012, and the Conforming subindex decreased 4.3 percent to its lowest level in the survey, which goes back to 2011.

Joel Kan, MBA’s Vice President and Deputy Chief Economist, noted that “mortgage credit availability decreased to its lowest level since January 2013 with all loan types seeing declines in availability over the month.” The ongoing trend of shrinking industry capacity as mortgage rates stayed significantly higher than a year ago is one reason for this decline. Furthermore, amid this unsteady interest rate climate and a possibly declining economy, there has been a decrease in the availability of refinance programs catering to borrowers with low credit scores and high loan-to-value ratios.

The Total MCAI, along with the Conventional, Government, Conforming, and Jumbo MCAIs, employs a consistent methodology to display the comparative credit risk and accessibility within their respective indices. The Government MCAI focuses on scrutinizing loan programs offered by FHA/VA/USDA, whereas the Conventional MCAI evaluates non-government loan programs. The Conforming and Jumbo MCAIs are portions of the Conventional MCAI and exclude any loan offerings from FHA, VA, or USDA.

The Conforming and Jumbo indices share the equivalent “base levels” with the Total MCAI, which is set at 100 as of March 2012. On the other hand, the Conventional and Government indices have “base levels” adjusted in March 2012. The MBA fine-tuned the Conventional and Government indices to more accurately reflect their position in March 2012 in comparison to the benchmark of Total=100.

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