The MBA’s Mortgage Credit Availability Index fell 2.5% to 113.2 last month. A drop in the MCAI indicates tightening lending standards.
“The major cause of the decline in the credit index in October was the removal of special loan programs which only pertain to REO sales,” MBA chief economist Mike Fratantoni said. “These programs were likely discontinued due to the shrinking level of REO properties for sale on the market.”
Fratantoni said conventional credit should loosen in the coming months thanks to newly announced government programs.
“FHFA recently announced plans regarding efforts to expand access to conventional conforming credit through greater clarity with respect to repurchase risk, and a modest expansion of higher LTV lending,” he said. “These changes are not yet finalized, and hence are clearly not reflected in the October data.
Mortgage credit availability dropped last month, but mostly due to the elimination of programs strictly geared to real estate-owned properties, according to new data from the Mortgage Bankers Association.