January Mortgage Credit Availability Increases
Mortgage credit availability increased in January, the Mortgage Bankers Association reported this morning.
The MBA Mortgage Credit Availability Index rose by 2 percent to 124.6 in January. The Conventional MCAI increased by 4.8 percent, while the Government MCAI decreased by 0.1 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 2.2 percent and the Conforming MCAI rose by 7.7 percent.
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.
“The growth in credit availability in January coincides with a housing market that is poised for a strong start to the year,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Improvements were driven by the conventional segment of the mortgage market, as lenders added ARM loans with lower credit score and higher LTV requirements. Despite ARM loans accounting for a very small share of loans applications in recent months, lenders are likely looking ahead to a strong home buying season by expanding their product offerings.”
Kan noted ongoing strength in home purchase applications and home sales continue to signal robust housing demand, even as low housing inventory remains a constraint. “However, even with overall credit availability picking up in three of the past four months, credit supply is still at its tightest level since 2014,” he said.
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 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.