According to the Mortgage Bankers Association, U.S. mortgage credit availability decreased nationwide in May 2020, based on data from their latest Mortgage Credit Availability Index (MCAI).
The MCAI fell by 3.1 percent to 129.3 in May. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012. The Conventional MCAI decreased 5.7 percent, while the Government MCAI decreased by 0.8 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 4.4 percent, and the Conforming MCAI fell by 6.9 percent.
"Mortgage lenders in May responded accordingly to the increased risk and uncertainty in the economy. Credit availability continued to decline, with MBA's overall index now at its lowest level since June 2014," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "There was a reduction in supply across all loan types, driven by further pullback in investors' appetites for loan programs with low credit scores and high LTVs. Credit tightening was observed at both ends of the market, with less availability of low downpayment programs designed for first-time homebuyers, as well as for conforming and non-conforming jumbo loans."
The Mortgage Bankers Association latest Forbearance Survey revealed this week that the total number of U.S. loans now in forbearance increased from 8.46% of servicers' portfolio volume in the prior week to 8.53% as of May 31, 2020.
COVID-19 pandemic is likely to hasten a housing trend already taking place across the nation--residential construction activity that is expanding at a more rapid rate in lower density markets such as smaller cities and rural areas.
The National Association of Realtors is reporting this week U.S. pending home sales decreased in April 2020, making two straight months of declines caused by the Coronavirus outbreak. Every major region experienced a drop in month-over-month contract activity.
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