Mortgage credit availability tightest since 2014
With the economy still entrenched in a long recovery from the effects of COVID-19, lenders continued to tighten their standards, resulting in the tightest mortgage credit availability in six years, according to the Mortgage Bankers Association (MBA).
The MBA’s Mortgage Credit Availability (MCAI) Index fell 4.7% to a reading of 120.9 in August — its lowest level since March 2014. The MCAI was benchmarked to a reading of 100 in March 2012; a drop in the MCAI signifies tightening credit criteria, while increases in the index indicate that lenders are loosening their standards.
“Credit continues to tighten because of uncertainty still looming around the health of the job market, even as other data on loan applications and home sales show a sharp rebound,” said Joel Kan, the MBA’s associate vice president of economic and industry forecasting. “A further reduction in loan programs with low credit scores, high LTVs, and reduced documentation requirements also continued to drive the overall decline in credit availability.”
Website content editor, Scotsman Guide 9/10/20