Mortgage credit tightens as ARMs and non-QM products are cut

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Mortgage credit availability tightened further in August, with lenders withdrawing variable-rate and ineligible mortgage products as origination volume continues to decline, the Mortgage Bankers Association said.

The August Mortgage Availability Index fell 0.5% to 108.3, the sixth consecutive month that lenders withdrew product offerings and remained at levels last seen a year ago. over nine years. In July, the index was 108.8while for August 2021, it was 123.7.

“With the global volume of origination expected to decline in 2022some lenders continue to streamline their operations by discontinuing certain loan programs to simplify their offerings,” Joel Kan, Associate Vice President of Economic and Industry Forecasting at the MBA said in a press release. “Furthermore, with a deteriorating economic outlook and signs of cooling in house price growth, the appetite for riskier lending programs has been reduced.”

The initiators withdrew ARMS and no QM although some might consider these products more viable in a rising interest rate the environment, according to the report.

On the other hand, home equity line of credit product offerings increased slightly during the month.

“With overall home equity still at high levels, HELOCs could benefit borrowers who may not want to give up their current low mortgage rate, but want to use their home equity to support further growth. other spending plans,” Kan said.

The government’s MCAI remained essentially unchanged from July. Black Knight’s rate lock data indicated demand for government-backed products in August, with the pursuit change in market share towards these offers and away from conventional loans.

This change contributed to the 1% drop in conventional MCAI. Both components fell during the month, with the compliant MCAI falling 1.2%; the jumbo share is down 0.7%.

The MBA calculates this index using loan program data aggregated by ICE Mortgage Technology. The MCAI was set at 100 for March 2012.

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