MBA expert explains ongoing trend in credit supply.
The Mortgage Credit Availability Index (MCAI) inched down 0.3% in June, indicating a tightening in lending standards due to elevated interest rates, the Mortgage Bankers Association said Tuesday.
The index dropped for the fourth month in a row to 119.6. Joel Kan, AVP of economic and industry forecasting at the MBA, blames significantly higher mortgage rates for slowing refinance and purchase activity and impacting the overall mortgage credit landscape.
Credit availability was mixed by loan type, Kan noted. The conventional index was up 1.2%, while the government index fell 1.7%. Broken down by the component indices of the Conventional MCAI, the Jumbo index climbed by 1.4%, and the Conforming MCAI rose by 0.6%.
“The decline in the government index was driven by the reduction in offerings for streamline refinance products from FHA and VA, which is the continuation of an ongoing trend reported in prior months,” Kan said.
“Although there was reduced supply of lower credit score, high LTV rate-term refinance programs, the decline was offset by increased offerings for conventional ARM and high balance loans,” he added. “With higher rates and elevated home prices, more prospective buyers are applying for ARMs, but activity remains below historical averages.”