MBA: October Mortgage Credit Availability Increases

Mortgage credit availability increased in October, the Mortgage Bankers Association reported this morning.

The MBA Mortgage Credit Availability Index increased 2.6 percent to 171.3 in October. A decline in the MCAI indicates tightening lending standards while increases in the index indicate loosening credit.  The index was benchmarked to 100 in March 2012.

Of the four component indexes, the Jumbo MCAI saw the greatest increase in availability over the month, rising 5.8 percent, followed by the Conventional MCAI (up 4.0 percent), the Conforming MCAI (up 2.2 percent) and the Government MCAI (up 1.6 percent). The MCAI analyzes data from Ellie Mae’s AllRegs Market Clarity business information tool. 

“Credit availability loosened in October driven by several different factors,” said MBA Vice President of Research and Economics Lynn Fisher. “The index was pushed up by an increase in the number of investors as well as an uptick in the availability of jumbo and high-balance loan programs.”

Fisher also noted observing greater availability of conventional conforming loan programs “designed to provide home ownership to a greater number of consumers.”

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 sub-indexes 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. The Jumbo and Conforming MCAIs are a subset of the conventional MCAI and do not include FHA, VA, or USDA loan offerings. The Jumbo MCAI examines conventional programs outside conforming loan limits while the Conforming MCAI examines conventional 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. 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.

The Total MCAI has an expanded historical series which gives perspective on credit availability going back nearly 10 years (expanded historical series does not include Conventional, Government, Conforming or Jumbo MCAI). The expanded historical series covers 2004 through 2010 to provide historical context to the current series by showing how credit availability has changed over the last 10 years–this includes the housing crisis and ensuing recession.

Data prior to March 31, 2011 were generated using less frequent and less complete data measured at six-month intervals and interpolated in the months between for charting purposes. Methodology on the expanded historical series from 2004 to 2010 has not been updated.

MBA updated its methodology in August 2016 which produced an updated set of index values (historically and moving forward). For more information on this updated methodology please visit www.mba.org/MortgageCredit and read the FAQ and Methodology documents. Any historical data obtained prior to August 2016 is not comparable to the current, revised index and should be replaced with the new history.

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