Mortgage Credit Access Bodes Well for Spring Market

Several factors combined to improve access to mortgage credit last month with the greatest gains coming in conforming loans.  The Mortgage Bankers Association (MBA) said its Mortgage Credit Availability Index (MCAI) rose to 121.4 in March, a month-over-month increase of 2.3 percent.  An increase in the index indicates that lending standards are easing.

Mike Fratantoni, MBA's Chief Economist said, "A number of factors contributed to a loosening of credit in March: Freddie Mac's introduction of their 97 LTV program (Fannie Mae's was implemented in December), additional loosening of parameters on jumbo loan programs, an increase in offerings of cash-out refinance loans, and continued expansion of the FHA streamline refinance and VA Interest Rate Reduction Refinance Loan (IRRRL) programs. As a result of these changes, all four component indexes of the MCAI increased last month: jumbo, conforming, conventional, and government.  Although credit remains tight by historical standards, this increase in availability, coupled with low rates and job market strength, should lead to stronger home purchase activity this spring." 

Of the four component indices, the Conforming MCAI saw the greatest easing (up 3.0 percent over the month) followed by the Conventional MCAI (up 2.4 percent). The Government MCAI and Jumbo MCAI both increased 1.8 percent over the month.

MBA assesses credit availability each month, analyzing data from Ellie Mae's AllRegs® Market Clarity® business information tool.  The index was benchmarked to 100 in March 2012.