Lending Standards Becoming Tight For Government Loans
A decline in each of its four component indices, especially the one measuring the availability of government-backed loans, drove overall mortgage credit availability lower in December according to the Mortgage Bankers Association (MBA). The group’s Mortgage Credit Availability Index (MCAI) dropped by 1.8 percent to a reading of 179.2. A decline in the MCAI indicates tightening lending standards while an increase is indicative of loosening credit.
The component measuring credit available in the government sector was down 2.6 percent in December. The Government MCAI has been trending down for most of 2017 after peaking at about 450. The index now appears, (MBA provides only percentages and graphs for the components, not numbers) to be around 430.
The Conventional MCAI was also down, by 0.7 percent, the Jumbo MCAI fell 1.4 percent and the Conforming MCAI was down 0.1 percent.
Lynn Fisher, MBA’s Vice President of Research and Economics explained, “In December a handful of investors made end of the year adjustments to their menu of offerings. This resulted in a net decrease in credit availability for government backed programs (FHA/VA/USDA), and especially for lower credit score, higher loan-to-value loans, as well as streamline (requiring less documentation) refinances. Despite the decline in the jumbo credit availability over the month, the jumbo index was up nearly 20 percent from December a year ago, by far the largest gain among the component indices.
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