The availability of mortgage credit continued to slide in May as lenders took precautionary measures amid the COVID-19 economic fallout, the Mortgage Bankers Association reported Wednesday.
MBA's Mortgage Credit Availability Index (MCAI) is now at its lowest level since June 2014, down by 3.1% to 129.3 in May. The index was benchmarked to 100 in March 2012.
According to Joel Kan, MBA associate vice president of economic and industry forecasting, the decrease was driven by sharp pullbacks on loans programs with low mortgage scores.
"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," Kan said. "There was a reduction in supply across all loan types, driven by a further pullback in investors' appetites for loan programs with low credit scores and high LTVs."
The conventional MCAI fell 5.7% in May, with the jumbo and the conforming MCAI down by 4.4% and 6.9%, respectively. Meanwhile, the government MCAI dipped by 0.8% last month.
"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," Kan said.