Cash-Out Loans Help Mortgage Credit Availability Improve

The Mortgage Bankers Association's new Mortgage Credit Availability Index (MCAI) increased in June to 112.3 from 108.9 in May, an increase of 2.2 percent. This was the fifth consecutive increase in the index which was publicly released for the first time in June.

Using data from AllRegs Market Clarity® product.and data on borrower eligibility (credit score, loan type, loan-to-value ratios, etc), underwriting criteria for over 85 lenders and investors, MBA produces a single monthly index number to capure how the availability of mortgage credit fluctuates from month to month. The lower the number compared to the base of 100 set in March 2012, the less available credit it presumed to be. By way of comparison, MBA said had the index existed in 2007 the MCAI would have been roughly 800.

MBA says the increase in the MCAI in July was primarily driven by increases in product offerings that allow cash-out refinancing, and some increase in offerings for borrowers with higher loan-to-value ratios or lower credit scores.