Mortgage credit availability tightened in April, MBA says

Mortgage credit availability decreased in April, breaking a three-month streak of easing standards, according to the Mortgage Credit Availability Index (MCAI) released Tuesday by the Mortgage Bankers Association (MBA).

The MCAI is based on underwriting criteria and borrower eligibility factors — including credit scores, loan types and loan-to-value (LTV) ratios — from more than 95 lenders and investors. MBA combines this data, provided via ICE Mortgage Technology, using a proprietary formula to produce the index.

The MCAI fell 0.4% to a reading of 107.9 in April. A decline in the index indicates tighter lending standards, while an increase signals looser standards. The index is benchmarked to 100 in March 2012.

The Conventional MCAI decreased 0.6% in April, while the Government MCAI — which includes Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA) loan programs — was unchanged.

Within the conventional segment, the Jumbo MCAI fell 1%, and the Conforming MCAI rose 0.5%.

“After three months of increases, mortgage credit availability decreased slightly in April as lenders tightened up on conventional loan programs with high LTV and low credit requirements,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Some of this tightening also impacted super jumbo loan programs, which resulted in a decline in the conforming jumbo index. Offsetting some of the April decline was a small increase in non-QM programs, a segment of the market that continues to grow.”

Kan added that “overall, credit availability remains tight by historical standards, but mortgage originations activity has recently been impacted by mortgage rates, housing inventory and the economic environment.”

The flat reading on the Government MCAI suggests that underwriting standards for FHA, VA and USDA products held steady in April, while conventional programs saw more selective tightening, especially for higher LTV ratios and lower credit scores.

The 1% decline in the Jumbo MCAI indicates lenders pulled back somewhat on jumbo offerings, including super jumbo loans, even as conforming credit availability improved modestly. For originators, this points to relatively more friction for higher-balance borrowers than for those seeking conforming loans.

The April data confirms that credit conditions remain restrictive compared to pre-2010 levels, with the limited expansion in non-QM programs partially offsetting tighter conventional standards.

This article was generated using HousingWire Automation and reviewed by a HousingWire editor before publication. The system helps convert company announcements and industry data into HousingWire-style news coverage.