A group called the Mortgage Banker Association publishes a monthly index that quantifies how tight or loose lending standards are compared to the baseline. This is called the Mortgage Credit Availability Index, or the MCAI. This is calculated using factors like LTV, FICO score, loan type, loan risk etc. The MCAI declined .9% in May to levels that are in line with the lowest since 2014. This move is not significant in the overall picture, but rather another installment of the same trend seen since the beginning of the pandemic.
Joel Kan, Associate Vice President of Economic and Industry Forecasting, had some thoughts on the matter. He stated, “Last month’s tightening was most notable in the government and jumbo segments of the mortgage market. The decrease in government credit was driven mainly by a reduction in streamline refinance programs, as mortgage rates increased sharply through May, slowing refinance activity. Jumbo credit availability, which was starting to see a more meaningful recovery from 2020’s pullback, declined after three months of expansion.”