After a Tight December, Credit Standards Loosen

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Mortgage credit availability increased significantly
in January.  The Mortgage Bankers
Association said its Mortgage Credit Availability Index (MCAI) rose 2.1 percent in
January, more than offsetting December’s 1.8 percent loss.  After the increase the MCAI was at 182.9. A
decline in the MCAI indicates that lending standards are tightening, while
increases in the index are indicative of loosening credit.

 

 

 

Lynn
Fisher, MBA’s Vice President of Research and Economics said, “Jumbo credit
programs rebounded most strongly and reached a new series high, driven by an
increase in the number of programs with reduced documentation requirements. In
government lending programs, credit availability remains somewhat lower than
the rest of 2017
.”

The MCAI has four
components, each identified with a loan product, and all increased during the
month. The Conventional MCAI rose by more (up 3.6 percent) than the Government
MCAI (up 0.9 percent). The component indices of the Conventional MCAI both
increased from the month prior, with the Jumbo MCAI gaining more (up 6.1
percent) than the Conforming MCAI (up 1.1 percent).

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 are gathered from over 95 lenders/investors.  MBA combines them from data from the AllRegs®
Market Clarity® product 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.



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