December Mortgage Credit Availability Inches Down
Mortgage credit availability fell by just 0.1 percent in December, the Mortgage Bankers Association reported Tuesday.
The MBA Mortgage Credit Availability Index fell by 0.1 percent to 103.3 in December. The Conventional MCAI decreased by 0.1 percent, as did the Government MCAI. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.2 percent, while the Conforming MCAI was unchanged.
“Mortgage credit availability was mostly unchanged in December as mortgage rates remained significantly higher than the prior two years and both refinance and purchase activity slowed dramatically,” said Joel Kan, MBA Vice President and Deputy Chief Economist. “The doubling of mortgage rates over the past year caused credit availability to shrink 18 percent during the same period. This pivot in the market resulted in lenders exiting certain origination channels to manage their operational costs or stop lending altogether, which was a main driver in the decrease in the credit supply.”
Additionally, Kan noted, “investors stopped offering many streamlined refinance programs as rates increased and the refinance market shrank. The segment of the market which showed the sharpest decline in credit availability was FHA and VA lending –which saw a 23 percent decline over 12 months.”
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.