Mortgage credit availability fell last month after three months of increase due to low conventional and government supply, according to the Mortgage Bankers Association.
MBA's Mortgage Credit Availability Index (MCAI) fell 3.5% to 182.2 in December. The availability of conventional loans also dropped 1.4%, while government loans plunged 6.1%.
Of the component indices of the Conventional MCAI, the jumbo and the conforming MCAI both shrank 1.3% and 1.6%, respectively.
"Perhaps most noteworthy was a 6% drop in government credit supply because of changes to the Veterans Administration (VA) loan program, which eliminated loan limits for certain borrowers as of Jan 1, 2020," said Joel Kan, associate vice president of economic and industry forecasting at MBA.
The declines might have prompted many investors to remove VA programs in high-cost counties from their offerings, according to Kan
"There was also a reduction in streamline refinance programs, as slightly higher rates slowed the refinance market at the end of 2019," Kan said.