News Column

Mortgage Credit Availability Increases Slightly in July

August 5, 2014



WASHINGTON, Aug. 5 -- The Mortgage Bankers Association issued the following news release:

Mortgage credit availability increased in July according to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) which analyzes data from the AllRegs Market Clarity product.

The MCAI increased 0.5 percent from 115.8 in June to 116.4 in July. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. The index was benchmarked to 100 in March 2012.

The main driver in the MCAI's increase was a rise in the number of jumbo Adjustable Rate Mortgage (ARM) programs. Increased availability of high balance Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) loan programs also contributed to the net loosening to the index. Many investors added 5/1, 7/1, 10/1 and, in some cases, 3/1 Jumbo ARM programs.

Additionally, there was a slight loosening in lender criteria for several programs with respect to minimum credit scores and maximum loan-to-value (LTV) ratios, especially FHA and VA loans.

NEW CONVENTIONAL AND GOVERNMENT COMPONENT INDICES

Starting this month, MBA will start reporting on two additional measures of credit availability as part of the monthly MCAI release: the Conventional Mortgage Credit Availability Index and the Government Mortgage Credit Availability Index, with historical data back to 2011.

The Conventional and Government MCAIs, which are component indices of the Total MCAI, are constructed using the same methodology and are designed to show relative credit risk/availability for conventional and government (FHA/VA/USDA) loan programs. The difference between the component indices and the total MCAI is first, the population of programs they examine, and second, the "base levels" to which they are calibrated. Using data from the MCAI and the Weekly Applications Survey, MBA calibrated the Conventional and Government indices to better represent where each index might fall in March 2012 (the "base period") relative to the Total=100 benchmark.

EXPANDED HISTORICAL SERIES

The Total MCAI has an expanded historical series which gives perspective on credit availability going back 10-years (expanded historical series does not include new Conventional or Government MCAI). The expanded historical series covers 2004 through 2010, and was created to provide historical context to the current series by showing how credit availability has changed over the last 10 years - this includes the housing crisis and ensuing recession. Data prior to March 31, 2011, was generated using less frequent and less complete data measured at 6-month intervals and extrapolated in the months between for charting purposes.

ABOUT THE MORTGAGE CREDIT AVAILABILITY INDEX

The MCAI provides the only standardized quantitative index that is 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 over 85 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=69; Government March 31, 2012=222.

To learn more about the AllRegs Market Clarity platform click here. (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, please click here or contact MBAResearch@mba.org.

[Category: Financial Services]

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Source: Targeted News Service


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