Mortgage credit availability fell 1% in August

Mortgage credit availability in the U.S. tightened by 1% in August, according to data from the Mortgage Bankers Association (MBA). The Mortgage Credit Availability Index (MCAI) fell to 107.3, signaling a reduction in lending standards. This decline was largely attributed to lenders pulling back on loan programs that require flexible documentation and cash-out refinances, many of which had jumbo features.

The conventional loan index saw a decrease of 1.8%, with jumbo loan availability specifically dropping by 2.5%. In contrast, the availability of government-backed loans, including those from the FHA, VA, and USDA, remained unchanged. The conforming loan index also stayed stable, reflecting conservative lending standards maintained by lenders.

This tightening of credit conditions occurred as mortgage rates in August reached their highest levels in over a year, according to the MBA. The MCAI incorporates various factors such as borrower credit scores, loan types, and loan-to-value ratios, utilizing underwriting and eligibility data from over 95 lenders and investors.