June Mortgage Credit Availability Declines

Mortgage credit availability fell for the fourth straight month in June amid rising interest rates, the Mortgage Bankers Association reported Tuesday.

The MBA Mortgage Credit Availability Index fell by 0.3 percent to 119.6 in June. The Conventional MCAI increased by 1.2 percent, while the Government MCAI decreased by 1.7 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 1.4 percent, while the Conforming MCAI rose by 0.6 percent.

“Mortgage credit availability decreased slightly in June, as significantly higher mortgage rates compared to a year ago slowed refinance activity and impacted the overall mortgage credit landscape,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “While there was reduced supply of lower credit score, high LTV rate-term refinance programs, the decline was offset by increased offerings for conventional ARM and high balance loans. With higher rates and elevated home prices, more prospective buyers are applying for ARMs, but activity remains below historical averages.”

Kan noted the decline in the government index was driven by the reduction in offerings for streamline refinance products from FHA and VA, “which is the continuation of an ongoing trend reported in prior months.”

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.

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 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.