MBA – Mortgage Bankers Association: Decrease in Mortgage Credit Availability in December

Last Updated on January 10, 2024 by Robert C. Hoopes

Mortgage Credit Availability Declines in December, Signaling Tightening Lending Standards

December saw a decrease in mortgage credit availability, according to the Mortgage Credit Availability Index (MCAI) report released by the Mortgage Bankers Association (MBA). The MCAI fell by 4.6% to 92.1, indicating that lending standards are tightening.

Both the Conventional MCAI and the Government MCAI experienced drops, with the former decreasing by 3.2% and the latter by 5.9%. The decline in the government index was largely driven by lower investor demand for renovation loans and streamline refinance loans.

Factors contributing to the decline in credit availability include ongoing industry consolidation, resulting in the removal of more loan programs from the marketplace. As a result, potential homebuyers may face increased challenges when seeking mortgage financing.

The Jumbo MCAI, which refers to loans that exceed the conforming loan limits set by Fannie Mae and Freddie Mac, decreased by 1.7%. Similarly, the Conforming MCAI, which represents loans that adhere to these loan limits, fell by 5.9% in December.

The MCAI is a valuable tool for understanding mortgage credit availability, as it is calculated using factors related to borrower eligibility, such as credit score and loan-to-value ratio. This index provides a summary measure of mortgage credit availability at a specific point in time.

In addition to monitoring current credit conditions, the MCAI offers an expanded historical series, giving insights into credit availability over the past 10 years. This includes significant events like the housing crisis and recession, allowing industry professionals to analyze trends and make informed decisions.

While the decrease in mortgage credit availability may present challenges for prospective homebuyers, it is essential to understand the wider context of this trend. By considering historical data and understanding the factors influencing credit availability, individuals can navigate the current market conditions and make informed decisions about their mortgage options.

For more information on the Mortgage Credit Availability Index and its implications for the MBA community and those considering an MBA career, please visit My MBA Career’s website.