Mortgage Credit Tightens Slightly, but not for Jumbo Borrowers

By: Jann Swanson •

Mike Fratantoni, Chief Economist of the Mortgage Bankers Association explained the slightly lower Mortgage Credit Availability Index (MCAI) for April as the result of countervailing trends.  "On one hand, credit continues to be more available to jumbo borrowers, particularly those seeking adjustable rate mortgages," he said "and we are beginning to see some loosening within conventional and FHA programs for conforming loans.  On the other hand, some investors shut down or tightened criteria for certain programs."

The MCAI for the month was at 113.8 compared to 114.0 in March, a decrease of 0.18 percent. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of a loosening of credit. 

 

 

The MCAI is calculated using several factors related to borrower eligibility (credit score, loan type, loan-to-value ratio, etc.).  Data is collected from over 85 lenders/investors and combined with data from AllRegs® Market Clarity® product and a proprietary formula derived by MBA to create a summary measure indicated mortgage credit availability at a point in time.  The index was benchmarked to 100 in March 2012.  

This month MBA announced that MCAI now has an expanded historical series covering 2004 through 2010.  The new series was created to show how credit availability has changed over the last 10 years, a period which includes the housing crisis and subsequent recession.  Fratantoni said, "This expanded time series goes back an additional seven years and provides information on credit availability in pre-recessionary periods.  It is particularly important with these data to distinguish between pre-recessionary periods and what might be considered 'normal.'  Given the new regulatory environment, there is no guarantee we will return to those levels."

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.