According to HousingWire, mortgage credit availability tightened a bit in September. The Mortgage Credit Availability Index, which is tracked by the Mortgage Bankers Association, dropped by just under a tenth of a point to 107.1. When this index goes down, it tells us that lenders are being more cautious about who they lend to and what terms they're offering. Think of it as the lending market getting a little pickier.
The tightening showed up across different loan categories, though the changes were modest. Conventional loans saw a bigger pullback than government-backed loans, which stayed flat. Within conventional lending, jumbo loans dropped for the second month running, while conforming loans had a slightly smaller decrease. Overall, lenders were asking for more documentation from borrowers and becoming more selective about certain types of loans.
What really tightened up was the availability of cash-out refinancing and loans for investors purchasing property. Those options became noticeably harder to access in September. According to Joel Kan, the MBA's chief economist, lenders were being more strict across the board, though alternative lending programs continued to grow and helped offset some of the tightness in the jumbo market.
The index takes into account many factors that matter to how a lender evaluates you as a borrower, including your credit score, the type of loan you want, and how much money you're putting down compared to the home's price. The MBA pulls data from over ninety five lenders and investors to come up with this reading, so it's a pretty solid snapshot of what's actually happening in the lending world.
What I am seeing locally here in the Bay Area and East Bay is that this kind of tightening affects real people looking to buy or refinance. Buyers with strong credit and solid down payments typically weather these periods better, but if you're on the marginal side of qualification or thinking about a cash-out refi, you might find fewer options and stricter requirements than you would have a few months ago.
