Credit tightening is becoming more evident according to the Mortgage Bankers Association (MBA). Its Mortgage Credit Availability Index fell to a reading of 125.0 in June, a loss of 3.3 percent. A decline in the index indicates stricter lending standards.
Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting explained. “Mortgage credit supply dropped again in June, as investors further reduced their willingness to purchase jumbo loans and those with lower credit scores. Lenders are navigating a gradual economic and housing market recovery that is still facing headwinds from the ongoing COVID-19 pandemic. The overall credit availability index decreased 3.3 percent to its lowest level since April 2014, with all of the sub-indexes falling to lows not seen since 2014-2015.”
Added Kan, “Credit supply has fallen over 30 percent since February – before the pandemic – with an 18 percent decrease in government loan availability, and a 57 percent drop in jumbo loan availability.”