March Mortgage Credit Availability Posts Modest Increase
Mortgage credit availability rose in March after falling to a 10-year-low in February, the Mortgage Bankers Association reported Tuesday.
The MBA Mortgage Credit Availability Index rose by 0.4 percent to 100.5 in March. The Conventional MCAI increased 1.1 percent, while the Government MCAI decreased by 0.2 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.4 percent, while the Conforming MCAI rose by 0.4 percent.
“Mortgage credit supply increased modestly in March but remained close to its tightest levels since 2013,” said Joel Kan, MBA Vice President and Deputy Chief Economist.. “With the spring buying season underway, lenders are grappling with the threat of a recession and tighter overall financial conditions following the recent bank failures.”
Kan noted the supply of government mortgage credit – which includes FHA and VA loans that many first-time homebuyers rely on – declined for the third time in four months, which could potentially hinder first-time buyer activity. “There was a small increase in credit availability for jumbo loans, with more programs offered for cash-out refinances,” he said. “However, we expect banks, which account for most of the jumbo market, will tighten jumbo credit criteria in response to recent challenges in the banking sector.”
The MCAI analyzes data from ICE Mortgage Technology.A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The index was benchmarked to 100 in March 2012.
About the Mortgage Credit Availability Index
The MCAI provides the only standardized quantitative index solely focused on mortgage credit.
The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.). These metrics and underwriting criteria for more than 95 lenders/investors are combined by MBA using data made available via the AllRegs Market Clarity product and a proprietary formula derived by MBA to calculate the MCAI, a summary measure which indicates the availability of mortgage credit at a point in time. Base period and values for total index is March 31, 2012=100; Conventional March 31, 2012=73.5; Government March 31, 2012=183.5.
To learn more about the ICE Mortgage Technology, visit http://answers.allregs.com/MCAI-Market-Clarity. For more information on the Mortgage Credit Availability Index, including Methodology, Frequently Asked Questions and other helpful resources, visit www.mba.org/MortgageCredit or contact MBAResearch@mba.org.
