Before you can buy a house, you need to secure financing. That means getting a mortgage. But the standards used to determine whether or not – or how much – a potential buyer is approved to borrow aren't fixed.
There are times when the mortgage approval process is more difficult and times when it's easier. Because of this, the Mortgage Bankers Association keeps a monthly measure of whether lending standards are loosening or tightening. Any increase in their Mortgage Credit Availability Index means standards are loosening and it's getting easier for prospective borrowers. A decrease indicates standards have tightened.
In July, credit availability tightened. Joel Kan, MBA's associate vice president of economic and industry forecasting, says the decline was due to slowing demand. “The 9 percent decline in the July index was the largest monthly decrease since April 2020,” Kan said. “Lenders have responded accordingly to the decrease in demand for refinance and purchase loans by reducing loan offerings, including for ARMs, cash-out refinances, and investment properties.”
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