Homebuyers face credit crunch for third straight month

Joel Kan, MBA’s associate vice president of economic and industry forecasting, noted that the index remains more than 30% below pre-pandemic levels.

The report showed that May’s tightening was most notable in the government and jumbo segments of the mortgage market. MBA’s Conventional MCAI dropped 0.4%, while the Government MCAI fell by 1.3%. Jumbo credit supply decreased by 1.1%, while the availability of conforming loans rose by 1%.

Kan cited recent months’ credit tightening in refinance programs as the major contributor to the downturn.

“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,” Kan explained.