Lending Standards Becoming Tight For Government Loans

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A decline in each of its four component indices, especially the one
measuring the availability of government-backed loans, drove overall mortgage
credit availability lower in December according to the Mortgage Bankers Association
(MBA).  The group’s Mortgage Credit
Availability Index (MCAI) dropped by 1.8 percent to a reading of 179.2.  A decline in the MCAI indicates tightening
lending standards
while an increase is indicative of loosening credit.

The component measuring
credit available in the government sector was down 2.6 percent in December. The
Government MCAI has been trending down for most of 2017 after peaking at about
450.  The index now appears, (MBA
provides only percentages and graphs for the components, not numbers) to be around
430.

The Conventional MCAI was
also down, by 0.7 percent, the Jumbo MCAI fell 1.4 percent and the Conforming
MCAI
was down 0.1 percent.  

Lynn Fisher, MBA’s Vice
President of Research and Economics explained, “In December a handful of
investors made end of the year adjustments to their menu of offerings. This
resulted in a net decrease in credit availability for government backed
programs (FHA/VA/USDA), and especially for lower credit score, higher
loan-to-value loans, as well as streamline (requiring less documentation)
refinances. Despite the decline in the jumbo credit availability over the
month, the jumbo index was up nearly 20 percent from December a year ago, by
far the largest gain among the component indices.”

MBA’s MCAI was
benchmarked in March 2012 at 100, while the Conventional and Government indices
have adjusted “base levels”; Conventional March 31, 2012=73.5; Government March
31, 2012=183.5.



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