Mortgage lenders tighten standards

But despite the ongoing economic recovery, credit supply remains low
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Mortgage credit supply increased slightly in July, driven by an uptick in jumbo loan programs.

The Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI) was up 0.3% to 119.1 in July, indicating lending standards tightened a little compared to June. The index was benchmarked to 100 in March 2012.

“The overall gain was despite another month of pullbacks in high-LTV refinance programs due to GSE policy changes,” said Joel Kan, AVP of economic and industry forecasting at MBA. “The elimination of more high-LTV refinance loans drove most of the 3% drop in the conforming index, but that was somewhat offset by lenders adding new refinance loan programs to help qualified, lower-income GSE borrowers. The bounce back in jumbo credit availability followed a sharp drop in June, as some investors renewed their interest in jumbo ARM loans for cash-out refinances and investment homes.” 

The Conventional MCAI grew 0.8%, while the Government MCAI remained unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI rose by 3.8%, and the Conforming MCAI dropped by 3.2%.

“Even as the economic recovery is underway, overall credit supply has remained close to its lowest levels since 2014. Some borrowers are still in pandemic-related forbearance status, and servicers continue to work through possible resolutions for these borrowers,” Kan said.

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