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Credit Availability Tightens In July

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.”

While the industry is making this move, First International Bank & Trust remains committed to helping our customers move into their dream home. We recently launched our Lock N Shop program which offers you the ability to “lock” in your market interest rate prior to selecting a new property address. Generally, when searching for a new home, a buyer finds their new home, then has the ability to lock in their rate based on current market conditions. With our Lock-N-Shop program, the buyer can lock in their market interest rate prior to selecting the home they wish to purchase. The uniqueness of this program gives the buyer peace of mind knowing their rate first and leaves behind the worry of a changing rate environment.