Credit Access Continues Slow but Steady Improvement

A loosening of access to GSE (Freddie Mac and Fannie Mae) loans in September, contributed to a slight increase in the Mortgage Credit Availability Index (MCAI.)  The Mortgage Bankers Association said that its index increased 0.3 percent in September to a reading of 126.5.  A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit.  The index has risen steadily, except for a slight downturn in July, since October 2014.

The MCAI consists of four component indices. Of the four, the Conventional MCAI saw the greatest loosening, rising 1.1 percent over the month.  The Conforming MCAI was up 0.8 percent. The Jumbo MCAI was unchanged over the month and the Government MCAI decreased 0.2 percent.

"Credit availability increased slightly in September due to some expansion of conventional affordable offerings," said Mike Fratantoni, MBA's Chief Economist. "In particular, this month there was an increase in the offerings of Freddie Mac's affordable lending programs."

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 95 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.