April Mortgage Credit Availability Slips

Mortgage credit availability fell in April, the second straight monthly decrease, the Mortgage Bankers Association reported Tuesday.

The MBA Mortgage Credit Availability Index fell by 3.2 percent to 121.1 in April. The Conventional MCAI increased 0.7 percent, while the Government MCAI decreased by 6.5 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI increased by 0.3 percent and the Conforming MCAI rose by 1.2 percent.

“Lenders reacted to the jump in mortgage rates over the past two months,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “With the rate/term refinance business drying up, lenders have reduced the availabi lity of government streamline refinancing programs, which are no longer as relevant an option for many borrowers.”

Kan noted the conventional index slightly increased, as lenders added more ARM programs to help borrowers overcome higher rates and home prices. “The ARM share in MBA’s Weekly Applications Survey has also increased this year, but it is still low when compared to the mid-2000s,” he said. “Furthermore, credit availability is still much tighter than it was then, both in terms of credit requirements and the types of loans offered. Jumbo lenders are somewhat loosening credit criteria, and jumbo rates have increased less than conforming rates this year, offering more opportunities for jumbo borrowers looking to purchase a home.”

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.