MBA: Mortgage Credit Availability Falls for 3rd Month
Mortgage credit availability fell in January for the third straight month, the Mortgage Bankers Association reported this morning.
The MBA Mortgage Credit Availability Index decreased by 0.4 percent to 123.8 in January. Of the four component indices, the Conforming MCAI saw the greatest tightening (down by 1.5 percent), followed by the Government MCAI (down by 0.8 percent). The Conventional MCAI was unchanged, while the Jumbo MCAI increased by 0.2 percent over the month.
The report analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool. 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.
MBA Vice President of Research and Economics Lynn Fisher said the decrease in credit availability was driven by a decline in some FHA and conventional offerings. “These declines were only partially offset by loosening among adjustable rate mortgage and jumbo lending programs,” she said.
MBA reports on five total measures of credit availability as part of the monthly MCAI release: the Total Mortgage Credit Availability Index; the Conventional Mortgage Credit Availability Index; the Government Mortgage Credit Availability Index; the Conforming Mortgage Credit Availability Index; and the Jumbo Mortgage Credit Availability Index, with historical data back to 2011.
The Conventional, Government, Conforming and Jumbo MCAIs are constructed using the same methodology as the Total MCAI and are designed to show relative credit risk/availability for their respective index. The primary difference between the total MCAI and the Component Indices are the population of loan programs which they examine. The Government MCAI examines FHA/VA/USDA loan programs, while the Conventional MCAI examines non-government loan programs. Similarly, the Jumbo MCAI examines everything flagged as “Jumbo” while the Conforming MCAI examines loan programs that fall under conforming loan limits.
The Conforming and Jumbo indices have the same “base levels” as the Total MCAI (March 2012=100), while the Conventional and Government indices have adjusted “base levels” in March 2012. Using data from the MCAI and the Weekly Applications Survey, MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the “base period”) relative to the Total=100 benchmark.
Expanded Historical Series
The Total MCAI has an expanded historical series, which gives perspective on credit availability going back 10-years (expanded historical series does not include Conventional, Government, Conforming or Jumbo MCAI). The expanded historical series covers 2004 through 2010 and was created to provide historical context to the current series by showing how credit availability has changed over the past 10 years, including the housing crisis and ensuing recession. Data prior to March 31, 2011 was generated using less frequent and less complete data measured at six-month intervals and interpolated in the months between for charting purposes.
About the MCAI
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 85 lenders/investors are combined by MBA using data made available via the Ellie Mae 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 value for all indexes is March 31, 2012=100.
To learn more about the Ellie Mae AllRegs Market Clarity platform 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.
