News Column

Mortgage Credit Availability Decreases Slightly in August

September 4, 2014



WASHINGTON, Sept. 4 -- The Mortgage Bankers Association issued the following news release:

Mortgage credit availability decreased in August 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 decreased 0.3 percentage points from 116.4 in July to 116.1 in August. 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.

"While overall access to credit tightened in August, we did see some loosening in certain segments of the purchase market," said Michael Fratantoni, MBA's Chief Economist. "In particular, lenders instituted additional offerings of loan programs like the FHA 203(k) home improvement program and one-time-close programs for financing new construction."

The FHA 203(k) loan allows borrowers to include renovation expenses in their loan amount. One-time-close loans streamline the purchase and financing of new construction.

NEW CONVENTIONAL AND GOVERNMENT COMPONENT INDICES

Last month, MBA began 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 differences between the component indices and the total MCAI are 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.

Both the Conventional MCAI and Government MCAI decreased less than one percentage point.

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.

ABOUT ALLREGS:

First introduced in 1989, AllRegs is used by virtually all of the top 100 lenders as well as throughout numerous governmental agencies, including Fannie Mae, Freddie Mac, the FHLBs, FHA, VA, RHS, Ginnie Mae, and more. AllRegs is the exclusive electronic publisher of the Fannie Mae and Freddie Mac Single and Multi-Family Seller/Servicer Guides and The Federal Home Loan Banks' MPF Program Guidelines. Products include single and multifamily underwriting & insuring guidelines as well as federal compliance laws and regulations, state compliance laws and regulations with plain-language analyses, contract publishing services, policy manuals and a library of historical guidelines. The educational division, AllRegs Academy, offers virtual and live training, as well as designation and practical guides. The Professional Services Group develops custom guides, policy manuals and other documents on a contract basis. For more information, call (800) 848-4904 or go to www.allregs.com.

AllRegs Press and Media: For more information contact: Casey Fleming, AllRegs (651) 289-4866 or cfleming@allregs.com

AllRegs Sales Inquiries: For more information, contact your Regional Account Executive (800) 848-4904 or sales@allregs.com

[Category: Financial Services]

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