Mortgage Credit Availability Falls for 6th Straight Month
Mortgage credit availability fell for the sixth straight month in August, remaining at its lowest level in nine years, the Mortgage Bankers Association reported Tuesday.
The MBA Mortgage Credit Availability Index fell by 0.5 percent to 108.3 in August. The Conventional MCAI decreased by 1.0 percent, while the Government MCAI remained essentially unchanged. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 0.7 percent and the Conforming MCAI fell by 1.2 percent.
“Mortgage credit availability declined slightly in August, as investors reduced their offerings of ARM and non-QM loan programs,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “As overall origination volume is expected to shrink in 2022, some lenders continue to streamline their operations by dropping certain loan programs to simplify their offerings. Additionally, with a worsening economic outlook and signs of cooling in home-price growth, the appetite for riskier loan programs has been reduced.
Kan noted slightly offsetting these trends, however, was a small increase last month in new HELOC products. “With aggregate home equity still at elevated levels, HELOCs could benefit borrowers who might not want to give up on their current, low mortgage rate but may want to utilize their home equity to support other spending plans,” he said.
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.