MBA: July Mortgage Credit Up Slightly

Mortgage credit availability increased slightly again in July the Mortgage Bankers Association reported this morning in its Mortgage Credit Availability Index.  

MBA reported the MCAI increased by 0.3 percent to 179.0 in July. Of the four component indices, the Jumbo MCAI saw the greatest increase in availability over the month (up 2.7 percent), followed by the Conventional MCAI (up 1.5 percent) and the Conforming MCAI (up 0.3 percent). The Government MCAI (down 0.6 percent) decreased from last month.  

MBA Vice President of Research and Economics Lynn Fisher said mortgage credit availability was driven by increased availability conventional programs.  

“Many agency eligible loan programs have been updated so that underwriting parameters for adjustable-rate mortgages more closely align with their existing fixed rate counterparts,” Fisher said. “In many cases this means higher loan to value ratios on existing ARMs loan programs, which exerted an upward pressure on the MCAI. This change affected conforming loan programs as well as agency jumbo programs, which focus on loans in high cost areas that exceed the baseline conforming loan limit of $424,000 but which are still eligible for purchase by the GSEs.”  

The MCAI 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. Historical MCAI values were revised this month due to the availability of additional data on certain types of conventional loan programs.   

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–this includes 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. Methodology on the expanded historical series from 2004 to 2010 has not been updated.  

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.  

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